Question No 18:
An agricultural corporation that paid 53% in income tax wanted to build a grain elevator designed to last twenty-five (25) years at a cost of $80,000 with no salvage value. Annual income generated would be $22,500 and annual expenditures were to be $12,000. Answer the question using a straight line depreciation and a 10% interest rate.
Which of the following interest rates disregards the effects of compounding periods that occur more frequent than annually?A. Continuous compounding rate
B. Simple interest rate
C. Minimum attractive rate of return
D. Nominal interest rate
Answer: D
