What Is the Effective Annual Interest Rate

question 23

Multiple Choice

What is the effective annual interest rate?

• A)9%.
• B)10%.
• C)11%.
• D)12%.$6,394 / $53,282 = 12% (from Payment #2)

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Definitions:

Credits

Credits refer to the accounting entries that can decrease assets or increase liabilities and equity on a company's balance sheet, opposite to debits.

Transactions

Financial events that affect the assets, liabilities, or equity of a company and can be measured in monetary terms.

Journal

A record where all financial transactions are entered initially, before being posted to individual accounts in the ledger, following the double-entry bookkeeping.

Chronologically

In the sequence of time, where events or records are arranged in the order of their occurrence.