Answered: Which option is more suitable according…

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Which option is more suitable according to the interest rate applied for the debt.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 14P

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Question

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We need to borrow 10000 ECU of money. There are different options for paying.
a. to pay 2938 ECU at the end of each year for a period of five years
b. To pay 237.90 ECU at the end of each month for five years
Which option is more suitable according to the interest rate applied for the debt.

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