Conways Roofing Services Is Offered a $1 Million Line of Credit

question 19

Multiple Choice

Conways Roofing Services is offered a $1 million line of credit for three months at an APR of 8%. The bank requires that the firm keep an amount equal to 12% of the loan principal in a non-interest-earning account with the bank as long as the loan remains outstanding. What is the actual three-month interest rate paid, expressed as an EAR?

• A) 9.41%
• B) 24.40%
• C) 60.30%
• D) 80.40%

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Definitions:

Socialization Process

The process by which individuals learn the values, norms, and required behaviors which are necessary for participating within their society or specific groups.

Strong Cultures

Organizational environments characterized by deeply shared values, beliefs, and norms that influence behavior of members.

Pathological Cultures

Organizational cultures that are unhealthy or dysfunctional, often hindering performance and well-being.

Subcultures

Groups within a broader culture that differentiates themselves from the larger culture to which they belong, often having distinct norms, values, or interests.