Gce Model Questions Vol1 2018 Commerce Question 31
Practice objective / multiple choice question 31 from the 2018 Gce Model Questions Vol1 Commerce examination.
Company X needs to raise exactly \(\text{₦}1{,}000{,}000\). It can either (i) obtain a 5‑year loan at \(8\%\) simple interest per annum, or (ii) issue 5‑year debentures with a \(6\%\) annual coupon payable semi‑annually, issued at \(95\%\) of face value. Assuming the debentures are redeemed at face value at maturity, which source of finance results in the lower total cost to the company, and by how much does it save compared with the other option?
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About This Question
This is Gce Model Questions Vol1 2018 Commerce Question 31. It is one of the objective questions from the 2018 Gce Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
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