AICPA CPA-Business Exam - Topic 1 Question 12 Discussion

Actual exam question for AICPA's CPA-Business exam

Question #: 12
Topic #: 1

A company obtained a short-term bank loan of $250,000 at an annual interest rate of 6 percent. As a condition of the loan, the company is required to maintain a compensating balance of $50,000 in its checking account. The company's checking account earns interest at an annual rate of 2 percent.

Ordinarily, the company maintains a balance of $25,000 in its checking account for transaction purposes. What is the effective interest rate of the loan?

A6.44 percent.

B7.11 percent.

C5.80 percent.

D6.66 percent.

Show Suggested Answer

Suggested Answer: A

Choice 'a' is correct. 6.44%. To calculate the effective interest rate:

by Stephaine at May 08, 2022, 07:54 PM

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Raina

5 months ago

7.11% seems way too high for this scenario!

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Bernardo

6 months ago

Wait, how does the checking account interest affect this?

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Leontine

6 months ago

I think the effective rate is higher than 6%.

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Trina

6 months ago

Don't forget the $50k compensating balance!

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Daniela

6 months ago

The loan is $250k at 6% interest.

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Sharika

6 months ago

The key is to focus on the distinct roles of the ISSO and ISSE. The ISSE provides technical advice, while the ISSO is more involved in the operational aspects. I think I can identify the true statements based on that.

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Jamal

6 months ago

I'm a little confused on the different network topologies. Let me re-read the question and options to make sure I understand before answering.

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Brinda

6 months ago

Hmm, I'm a bit confused by the different options. I'll need to think through the expected behavior of the SAX parser and how it should handle the line feeds and element structure.

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Willis

6 months ago

I'm a bit confused on this one. I'll need to double-check the QlikView Desktop settings and make sure I understand how Section Access is supposed to work.

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