Business, 18.03.2020 21:07 dennismathews01

You are considering two loans. The terms of the two loans are equivalent with the exception of the interest rates. Loan A offers a rate of 7.75 percent, compounded daily. Loan B offers a rate of 8 percent, compounded semi-annually. Which loan should you select and why?a. the annual percentage rate is 7.68 percent. b. the annual percentage rate is 7.15 percent. c the effective annual rate is 8.16 percent. d. the effective annual rate is 8.06 percent.

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Answer from: alaynaakrie9151

You should go for Loan B because its Effective Interest Rate is better than that of Loan A.

c. The effective annual rate is 8.16 percent.

Explanation:

We cannot make decisions based on the Nominal Interest Rates. So, we have to look at the Effective interest rates of each investment option because Effective Interest Rate takes the effect of compounding into account. The formula of Effective Interest Rate is:

r = [ (1 + i / n) ^ n] - 1

where

r = Effective Interest Rate

i = Nominal Interest Rate that is the interest rate states

n = No. of compounding periods.

Effective Interest Rate of Loan A = 8.057%.

Effective Interest Rate of Loan B = 8.16%.

So, it can seen that Loan B generates a better return.

Answer from: Quest

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.

Answer from: Quest

c is the answer, and do you have a ps4?

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