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Exam IIA-CIA-Part3 All Questions

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Exam IIA-CIA-Part3 topic 1 question 94 discussion

Actual exam question from IIA's IIA-CIA-Part3
Question #: 94
Topic #: 1
[All IIA-CIA-Part3 Questions]

An organization needs to borrow a large amount of cash to fund its expansion plan. Which of the following annual interest rates is least expensive?

  • A. 7 percent simple interest with a 10 percent compensating balance.
  • B. 7 percent simple interest paid at the end of each year.
  • C. 7 percent discount interest.
  • D. 7 percent compounding interest.
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Suggested Answer: B 🗳️
by 3f2afe3 at March 22, 2024, 9:56 a.m.

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3f2afe3
7 months, 1 week ago
pls explain
upvoted 1 times
emtofid
2 months, 1 week ago
Simple interest means the interest is only charged on the principal, without compounding. Since no compensating balance or discounting applies, the actual rate remains 7%. This is the cheapest option.
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