A businessman needs P50,000 for his operations. One financial institution is willing to lend him the money for one year at 12.5% discount rate. Another lender is charging 14%, with principal and interest payable at the end of one year. A third financier is willing to lend him P50,000 payable in 12 equal monthly installments of P4,600. Which offer is the best for him? Validate your answer.
A businessman needs P50,000 for his operations. One financial institution is willing to lend him the money for one year at 12.5% discount rate. Another lender is charging 14%, with principal and interest payable at the end of one year. A third financier is willing to lend him P50,000 payable in 12 equal monthly installments of P4,600. Which offer is the best for him? Validate your answer.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(Please draw cashflow diagram)
A businessman needs P50,000 for his operations. One financial institution is willing to lend him the money for one year at 12.5% discount rate. Another lender is charging 14%, with principal and interest payable at the end of one year. A third financier is willing to lend him P50,000 payable in 12 equal monthly installments of P4,600. Which offer is the best for him? Validate your answer.
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