please answer with complete solution IV.Odette and Johnson planned to put up a business which is a gaming hub for online games. They needed PHP250,000 as the capital to fully operate the business planned by borrowing the capital into a lending companyin their town. The lending institution has two options which is:Option 1: They will offer an annual simple interest rate of 15% however they will pay interest everyend of the year for 5 years.Option 2: They will offer an annual compound interest rate of 10% for 5 years and they will pay for itafter the term.Task:a. Compute for each offer in option 1 and option 2.b. Which option will make a disadvantage for Odette and Johnson?

We need to compute interest amount under each option to make comparison.

The lending institution has two options which is: 1: They will offer an annual simple interest rate of 15% howev the year for 5 years. 2: They will offer an annual compound interest rate of 10% for he term.

The lending institution has two options which is: 1: They will offer an annual simple interest rate of 15% howev the year for 5 years. 2: They will offer an annual compound interest rate of 10% for he term.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 15P

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Please use the formula given ty !
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