Timmie wishes his son Timmeus to receive P203B ten years from now. What amount should he invest if it will earn interest of 12% compounded annually during the first 5 years and 8% compounded quarterly during the next 5 years?

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.