Toronto Skaters Company Is Being Offered a One-Year Variable Rate

question 77

Multiple Choice

Toronto Skaters Company is being offered a one-year variable rate loan at a rate of prime + 0.75%.The loan is to be paid in quarterly installments and there are no other fees associated with it.The prime lending rate is currently 6% compounded quarterly.What is the effective annual cost of this loan?

• A) 6%
• B) 6.14%
• C) 6.75%
• D) 6.92%

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