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Question
Harris Flooring Inc. is planning to borrow $12,000 from the bank for new sanding machines. The bank offers the choice of a 12 percent discount interest loan or a 10.19 percent add-on, one-year installment loan, payable in 4 equal quarterly payments. What is the effective rate of interest on the 12 percent discounted loan?a. 10.7%
b. 12.0%
c. 12.5%
d. 13.6%
e. 14.1%
Answer
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