Neco Model Questions Vol1 2023 Commerce Question 11
Practice objective / multiple choice question 11 from the 2023 Neco Model Questions Vol1 Commerce examination.
A small business needs \(\text{₦}5{,}000{,}000\) for expansion. It can obtain financing from two sources: a bank loan with 12% per annum simple interest payable at the end of 3 years, and a private investor who will provide a capital grant of \(\text{₦}2{,}000{,}000\) but requires a 5% profit share on the net profit after 3 years. The business expects to generate a net profit of \(\text{₦}1{,}200{,}000\) per year from the expansion. Assuming the business will use the bank loan for the remaining amount needed, which source of finance results in a lower total cost to the business after 3 years? State the cheaper source.
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About This Question
This is Neco Model Questions Vol1 2023 Commerce Question 11. It is one of the objective questions from the 2023 Neco Model Questions Vol1 Commerce examination.
Difficulty level: Medium .
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