Gce Model Questions Vol1 2017 Commerce Question 22

Practice objective / multiple choice question 22 from the 2017 Gce Model Questions Vol1 Commerce examination.

Gce Model Questions Vol1 2017 Commerce Objective / Multiple Choice Medium Difficulty
Question 22 GCE_MODEL_QUESTIONS_VOL1 • 2017 • COMMERCE • objective

A firm needs \(2{,}000{,}000\) of capital for a project. It can raise equity (no interest) and a bank loan at 10% per annum. The firm wants the proportion of debt to total capital not to exceed 40% and also wants the annual interest payable to be no more than \(150{,}000\). In addition, the loan amount must be a multiple of \(50{,}000\). Determine the maximum amount of equity the firm can raise while satisfying all constraints, and state the corresponding loan amount.

Answer Options

A. Maximum equity = \(1{,}200{,}000\); corresponding loan = \(700{,}000\).
Correct Answer B. Maximum equity = \(1{,}200{,}000\); corresponding loan = \(800{,}000\).
C. Maximum equity = \(1{,}300{,}000\); corresponding loan = \(700{,}000\).
D. Maximum equity = \(1{,}000{,}000\); corresponding loan = \(1{,}000{,}000\).
Correct Answer
B
Correct Option:
Maximum equity = \(1{,}200{,}000\); corresponding loan = \(800{,}000\).

About This Question

This is Gce Model Questions Vol1 2017 Commerce Question 22. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Commerce examination.

Difficulty level: Medium .

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