Matt's Machine Company Has Borrowed $10 Million for Four Months

question 85

Multiple Choice

Matt's Machine Company has borrowed $10 million for four months at 5.5% APR compounded monthly, using inventory stored in a field warehouse as collateral. The warehouse fee is 0.5%, payable at the end of the loan. What is Matt's EAR?

• A) 5.5%
• B) 7.20%
• C) 0.58%
• D) 7.01%

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Definitions:

Variabilities

The extent to which data points in a given set differ from each other and from their average.

Oedipal Complex

A concept in psychoanalytic theory referring to a child's unconscious sexual desire for the opposite-sex parent and jealousy toward the same-sex parent.

Psychosexual Development

Freud's theory that childhood development occurs in a series of stages, each characterized by different pleasures and challenges.

Phenomenology

A philosophical approach that focuses on the direct examination and description of phenomena as consciously experienced, without theories about their causal explanation.