Which of the Following Accounts Has the Highest EAR

question 1

Multiple Choice

Which of the following accounts has the highest EAR?

• A)one that pays 6.1% every six months
• B)one that pays 1.0% per month
• C)one that pays 12.6% per year
• D)one that pays 3% every three months
• E)one that pays 0.2% per week

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Definitions:

Discount Rate

In discounted cash flow analysis, it's the rate used to bring future cash flows down to their present worth.

Accounting Break-even Quantity

The number of units that must be sold to cover all costs, both fixed and variable, with no profit or loss.

Variable Costs

Outgoings that are contingent upon the scale of production operations.

Fixed Costs

These are expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.