Neco 2021 Commerce Question 46

Practice objective / multiple choice question 46 from the 2021 Neco Commerce examination.

Neco 2021 Commerce Objective / Multiple Choice Medium Difficulty
Question 46 NECO • 2021 • COMMERCE • objective

An entrepreneur needs to raise ₦5,000,000 for a project. He can obtain a bank loan at \(12\%\) per annum, repayable in equal annual installments over 5 years, and he can also issue \(10\%\) debentures payable annually. The total annual cash outflow that the business can afford for financing is limited to ₦1,200,000. Determine the maximum amount that can be raised through the bank loan and the corresponding amount that must be raised through debentures.

Answer Options

Correct Answer A. Maximum loan amount ≈ ₦3,948,200 and debenture amount ≈ ₦1,051,800
B. Maximum loan amount ≈ ₦3,800,000 and debenture amount ≈ ₦1,200,000
C. Maximum loan amount ≈ ₦3,500,000 and debenture amount ≈ ₦1,500,000
D. Maximum loan amount ≈ ₦4,100,000 and debenture amount ≈ ₦900,000
Correct Answer
A
Correct Option:
Maximum loan amount ≈ ₦3,948,200 and debenture amount ≈ ₦1,051,800

About This Question

This is Neco 2021 Commerce Question 46. It is one of the objective questions from the 2021 Neco Commerce examination.

Difficulty level: Medium .

View More Neco 2021 Commerce Questions More Neco Practice Questions Back to Questions

Master the Exam!

You've seen a preview, but there are thousands more questions plus AI tutor to break down complex solutions.

Unlock Full Access Available for Android & Windows
Chat with Support