Waec Model Questions Vol1 2022 Commerce Question 13
Practice objective / multiple choice question 13 from the 2022 Waec Model Questions Vol1 Commerce examination.
A small firm needs to raise exactly ₦2,000,000 for a new project. Option A is a bank loan of ₦2,000,000 with an annual interest rate of 12% and a one‑time processing fee of 2% of the loan amount. Option B is to issue new shares at a nominal value of ₦250 each, promising an annual dividend of 8% of the nominal value per share. A flotation cost of 3% of the total issue price is charged on the share issue. Determine which source of finance has the lower annual cost and state the annual cost percentage for that source.
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About This Question
This is Waec Model Questions Vol1 2022 Commerce Question 13. It is one of the objective questions from the 2022 Waec Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
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