Topic : Simple Interest vs. Compound Interest Scenario 1 John and Mary, both Finance students at The University of the West Indies, need USD$12,500.00 each to fund their studies. At First Bank, John borrows USD$12,500.00 at 12% per annum for 3 years at Simple Interest and Mary borrows the same amount at the GCU Credit Union for the same period at 10% per annum, compounded annually. 1. Who pays more interest and by how much? 2. Which option would you choose and why?
Topic : Simple Interest vs. Compound Interest Scenario 1 John and Mary, both Finance students at The University of the West Indies, need USD$12,500.00 each to fund their studies. At First Bank, John borrows USD$12,500.00 at 12% per annum for 3 years at Simple Interest and Mary borrows the same amount at the GCU Credit Union for the same period at 10% per annum, compounded annually. 1. Who pays more interest and by how much? 2. Which option would you choose and why?
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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Topic : Simple Interest vs.
Scenario 1
John and Mary, both Finance students at The University of the West Indies, need USD$12,500.00 each to fund their studies. At First Bank, John borrows USD$12,500.00 at 12% per annum for 3 years at Simple Interest and Mary borrows the same amount at the GCU Credit Union for the same period at 10% per annum, compounded annually.
1. Who pays more interest and by how much?
2. Which option would you choose and why?
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