South Penn Trucking Is Financing a New Truck with a Loan

question 130

Multiple Choice

South Penn Trucking is financing a new truck with a loan of $10,000 to be repaid in 5 annual end-of-year installments of $2,504.56.What annual interest rate is the company paying?

• A) 7%
• B) 8%
• C) 9%
• D) 10%
• E) 11%

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Definitions:

Bad Debts

Money owed to a company that is considered irrecoverable and is written off as a loss.

Outstanding Balances

The total amount of money owed that has not yet been paid.

Credit Card

A plastic card issued by a bank allowing the cardholder to borrow funds at the point of sale, which are to be repaid with interest.

Barter

The direct exchange of goods or services between parties without the use of money.