You Borrow $95 Today for Six and a Half Weeks

question 52

Multiple Choice

You borrow $95 today for six and a half weeks. You must repay $100 at loan maturity. What is the effective annual rate on this loan?

• A) 50.73%
• B) 40.00%
• C) 32.33%
• D) 27.95%
• E) 37.93% (100/95)^(52/6.5)

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Definitions:

Scientific Process

A methodical approach to research and experimentation that seeks to understand natural phenomena through observation, experimentation, and data analysis.

Hypothesis

A suggested explanation formulated with minimal evidence to serve as a foundation for additional exploration.

Experiment

A method used to prove or disprove the validity of an idea or hypothesis.

Feasibility Study

A planning tool that allows entrepreneurs to test the possibilities of an initial idea to see if it is worth pursuing.