Waec Model Questions Vol1 2019 Commerce Question 3

Practice objective / multiple choice question 3 from the 2019 Waec Model Questions Vol1 Commerce examination.

Waec Model Questions Vol1 2019 Commerce Objective / Multiple Choice Medium Difficulty
Question 3 WAEC_MODEL_QUESTIONS_VOL1 • 2019 • COMMERCE • objective

A small business needs ₦5,000,000 for equipment. It can either (A) obtain a bank loan at 12% simple interest per annum for 3 years plus a processing fee of 2% of the principal, or (B) issue commercial paper at 10% interest per annum compounded annually for 3 years with no fees. Which option results in the lower total repayment and what are the total amounts payable for both options?

Answer Options

A. Option B is cheaper; total repayment Option A = ₦7,000,000, Option B = ₦6,600,000
B. Option B is cheaper; total repayment Option A = ₦6,950,000, Option B = ₦6,650,000
C. Option A is cheaper; total repayment Option A = ₦6,800,000, Option B = ₦6,900,000
Correct Answer D. Option B is cheaper; total repayment Option A = ₦6,900,000, Option B = ₦6,655,000
Correct Answer
D
Correct Option:
Option B is cheaper; total repayment Option A = ₦6,900,000, Option B = ₦6,655,000

About This Question

This is Waec Model Questions Vol1 2019 Commerce Question 3. It is one of the objective questions from the 2019 Waec Model Questions Vol1 Commerce examination.

Difficulty level: Medium .

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