ding for your new construction project. You need to borrow 51 million pesos. The bank offered you different lending options: option 1: 8% simple interest payable in 8 years. Option 2: 5% compounded annually payable in 6 years. Option 3: 3% compounded semiannually payable in 4 years. Option 4: 2% compounded quarterly payable in 3 years. You would pre
ding for your new construction project. You need to borrow 51 million pesos. The bank offered you different lending options: option 1: 8% simple interest payable in 8 years. Option 2: 5% compounded annually payable in 6 years. Option 3: 3% compounded semiannually payable in 4 years. Option 4: 2% compounded quarterly payable in 3 years. You would pre
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You need funding for your new construction project. You need to borrow 51 million pesos. The bank offered you different lending options: option 1: 8% simple interest payable in 8 years. Option 2: 5% compounded annually payable in 6 years. Option 3: 3% compounded semiannually payable in 4 years. Option 4: 2% compounded quarterly payable in 3 years. You would prefer to maximize the years needed to pay. Compute how much interest you would need to pay for each. Which one is the best option where you will pay the least interest.
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