If Mega Corp

question 58

Multiple Choice

If Mega Corp. borrows $9,000 and agrees to pay the lender $10,000 in one year, the annual interest rate on the loan is approximately _____%.

• A) 9.0
• B) 10.0
• C) 11.1
• D) 0.9

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Definitions:

Equity Method

An accounting technique used to assess the profits earned by investments in other companies, recognizing income based on the investor's share of the earnings.

Amortizations

The act of spreading out loan payments over a period of time, including both the principal and the interest.

Gross Profit

The difference between sales revenue and the cost of goods sold, indicating the efficiency of a company in producing and selling its products.

Goodwill

An intangible asset that arises when a buyer acquires an existing business, representing the value of the business's reputation, brand, and other unquantifiable elements.