Gce Model Questions Vol1 2020 Commerce Question 50
Practice objective / multiple choice question 50 from the 2020 Gce Model Questions Vol1 Commerce examination.
A small business needs \(\text{₦}500{,}000\). It can obtain the funds by either:\n\nOption A - a bank loan at 12\% simple interest per annum for 2 years, plus a processing fee of 2\% of the loan amount.\n\nOption B - a hire‑purchase arrangement for equipment with a cash price of \(\text{₦}600{,}000\). The buyer pays a 20\% down‑payment, then four equal annual instalments with interest charged at 10\% per annum on the reducing balance, and a documentation fee of \(\text{₦}5{,}000\).\n\nWhich option results in the lower total cost to the business? State the total cost for each option (in naira) and indicate the cheaper option.
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About This Question
This is Gce Model Questions Vol1 2020 Commerce Question 50. It is one of the objective questions from the 2020 Gce Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
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