- 10 Marks
QT – Nov 2017 – L1 – Q1d – Mathematics of Business Finance
Calculate and compare the annual percentage rates for two loan repayment options.
Question
The Asogli Company Ltd has been offered the following alternative terms for a one-year loan to be repayable plus the interest in full at the end of the year:
i) 2.5% per month compounded monthly
ii) 10% per six months compounded six-monthly.
Required:
Calculate, for each alternative, the annual percentage rate of interest. Recommend one of the alternatives and explain why.
Find Related Questions by Tags, levels, etc.
- Tags: Annual Percentage Rate (APR), Compound Interest
- Level: Level 1
- Topic: Mathematics of Business Finance
- Series: NOV 2017