A businesswoman needs P50,000 for his operations. One financial institution is willingto lend him the money for one year at 12.5%interest per annum(discounted). Anotherlender is charging 14%, with the principal andinterest payable at the end of one year. A third financier is willing to lend him 50,000 payable in 12 equal monthly installments of 24,600. Which offer is the best for him?

A businesswoman needs P50,000 for his operations. One financial institution is willingto lend him the money for one year at 12.5%interest per annum(discounted). Anotherlender is charging 14%, with the principal andinterest payable at the end of one year. A third financier is willing to lend him 50,000 payable in 12 equal monthly installments of 24,600. Which offer is the best for him?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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