Over the years,Leopard Productions has been slow making payments to its bank.Now it is in need of financing.Based on past experience,the interest rate Leopard will pay is the
A) interest rate determined by the SBA.
B) finance rate determined by the Department of Commerce.
C) prime rate.
D) prime rate plus 4 percent.
E) prime rate minus 2 percentage points.

Question

Quizplus · Accepted Answer

Based on the past experience of slow payments, Leopard Productions is likely to be classified as a higher risk borrower, and therefore would be charged a higher interest rate. The prime rate, which is typically used as a base rate for variable interest loans, plus an additional 4 percent would likely be the rate charged to Leopard Productions in this situation.

Over the Years,Leopard Productions Has Been Slow Making Payments to Its