Neco Model Questions Vol1 2021 Commerce Question 23
Practice objective / multiple choice question 23 from the 2021 Neco Model Questions Vol1 Commerce examination.
A business needs to raise ₦5,000,000. It can either obtain a bank loan at 12 % simple interest per annum for 3 years, with a processing fee of 2 % of the loan amount, or issue 10 % debentures for the same amount, with an issue cost of 1 % of the amount and interest payable annually at 10 % on the principal. Which source of finance results in the lower total cost over the 3‑year period, and what is that total cost? State the total cost for each option.
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About This Question
This is Neco Model Questions Vol1 2021 Commerce Question 23. It is one of the objective questions from the 2021 Neco Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
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