Gce Model Questions Vol1 2017 Commerce Question 25
Practice objective / multiple choice question 25 from the 2017 Gce Model Questions Vol1 Commerce examination.
A business takes a loan of ₦5{,}000{,}000 from a bank. The nominal annual interest rate is 12% payable monthly (i.e., 1% per month). The bank also charges an upfront processing fee of 2% of the loan amount, which is deducted from the loan proceeds. The loan is to be repaid in equal monthly instalments over 3 years. Determine the effective annual interest rate (EAR) that the business actually pays, taking the processing fee into account, and compute the monthly instalment amount (rounded to the nearest naira).
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About This Question
This is Gce Model Questions Vol1 2017 Commerce Question 25. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
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