Gce Model Questions Vol1 2021 Commerce Question 39
Practice objective / multiple choice question 39 from the 2021 Gce Model Questions Vol1 Commerce examination.
A company needs \(\text{₦}5,000,000\) of finance. Option A: a bank loan at 8% interest per annum with a 2% arrangement fee (paid up‑front). Option B: 10‑year debentures at 10% coupon with a 3% issue cost (paid up‑front). The corporate tax rate is 30%. Which source has the lower after‑tax cost and what is that cost (to two decimal places)?
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About This Question
This is Gce Model Questions Vol1 2021 Commerce Question 39. It is one of the objective questions from the 2021 Gce Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
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