An Organization Needs to Borrow a Large Amount of Cash

Multiple Choice

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.