A Construction Company Takes a Loan of $280,000 to Cover

question 43

Multiple Choice

A construction company takes a loan of $280,000 to cover the cost of a new grader.If the interest rate is 8.75%APR,and payments are made monthly for five years,what percentage of the outstanding principal does the company pay in interest each month?

• A)0.73%
• B)7.29%
• C)8.75%
• D)9.25%
• E)10.5%

---

Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company, which may or may not reflect the security's market value.

Stock Split

A corporate action to increase the number of outstanding shares while reducing the price per share, keeping the overall market capitalization the same.

Par Value

The face value of a bond or stock as specified by its issuer, which does not necessarily correspond to its market value.

Stock Dividend

A dividend payment made in the form of additional shares rather than a cash payout, increasing the number of shares held by each shareholder.