Anne Morgan Wants to Borrow $6,000 for a Period of Four

question 59

Multiple Choice

Anne Morgan wants to borrow $6,000 for a period of four years. She has two choices. Her bank is offering to lend her the amount at 7.25 percent compounded annually. She can also borrow from her firm and will have to repay a total of $8,130.93 at the end of four years. Should Anne go with her bank or the firm, and what is the interest rate if she borrows from her firm? (Round to the nearest percent.)

• A) She should borrow from the bank as the bank is charging a higher interest of 9%.
• B) She should borrow from her firm as it is charging a lower interest of 7%.
• C) She should borrow from the bank as the bank is charging a higher interest of 8%.
• D) She should borrow from her firm as it is charging a lower interest of 6%.

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Definitions:

Team Talkers

Individuals within a group or team who are particularly vocal or influential in discussions and decision-making processes.

Legitimate Power

Power that stems from being elected or appointed to a specific position or office.

Fellow Students

Peers or colleagues who are enrolled in the same educational institution or course.

Prescriptive

Relating to the imposition or application of rules or recommendations, often in a directive manner.