Use the Following Information for Questions

question 47

Multiple Choice

Use the following information for questions
A bank customer is granted credit for a $2,000 loan at 10% to be repaid in 12 equal installments.
-If the loan quoted has an add-on rate, what are the net proceeds of the loan?

• A) $2,200
• B) $2,100
• C) $2,000
• D) $1,800
• E) Cannot be determined

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Definitions:

Borrowed Funds

Capital that is obtained through loans or credit, typically for investment or expenditures, that needs to be repaid.

Retained Earnings

The portion of a company's profits not distributed to shareholders as dividends but instead reinvested in the business or kept as reserve.

Expected Costs

The forecasted amount of expenses that will be incurred as a result of a certain action or decision.

Interest Rates

The cost of borrowing money or the return on investment, typically expressed as a percentage.