A Loan Is Offered with Monthly Payments and a 10

question 149

Multiple Choice

A loan is offered with monthly payments and a 10 percent APR. What is the loan's effective annual rate (EAR) ?

• A) 10.00 percent
• B) 10.47 percent
• C) 11.20 percent
• D) 12.67 percent

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Definitions:

Cash Payments Journal

A financial journal that records all cash outflows or payments made by a business.

Subsidiary Ledger

A ledger containing all the details of a general ledger account, allowing for more detailed information and analysis of that account.

Cash Receipts Journal

A specialized accounting journal used to record all cash inflow transactions.

General Ledger

A comprehensive accounting record of all transactions of a company, detailed by accounts.