Waec Model Questions Vol1 2020 Commerce Question 46

Practice objective / multiple choice question 46 from the 2020 Waec Model Questions Vol1 Commerce examination.

Waec Model Questions Vol1 2020 Commerce Objective / Multiple Choice Medium Difficulty
Question 46 WAEC_MODEL_QUESTIONS_VOL1 • 2020 • COMMERCE • objective

A small business needs to raise exactly N500,000. It can obtain finance by (i) a bank loan at 12% per annum simple interest, repayable in equal annual installments over 3 years, and (ii) issuing shares at N100 each with a dividend of 10% per annum on the share capital. The business wants the annual cash outflow from loan repayments to be exactly equal to the annual dividend payment. How much should be raised through the bank loan and how much through share issuance?

Answer Options

Correct Answer A. Loan amount: N90,361; Share capital: N409,639
B. Loan amount: N95,000; Share capital: N405,000
C. Loan amount: N100,000; Share capital: N400,000
D. Loan amount: N80,000; Share capital: N420,000
Correct Answer
A
Correct Option:
Loan amount: N90,361; Share capital: N409,639

About This Question

This is Waec Model Questions Vol1 2020 Commerce Question 46. It is one of the objective questions from the 2020 Waec Model Questions Vol1 Commerce examination.

Difficulty level: Medium .

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