please answer with complete solution IV.Odette and Johnson planned to put up a business which is a gaming hub for online games. They needed PHP250,000 as the capital to fully operate the business planned by borrowing the capital into a lending companyin their town. The lending institution has two options which is:Option 1: They will offer an annual simple interest rate of 15% however they will pay interest everyend of the year for 5 years.Option 2: They will offer an annual compound interest rate of 10% for 5 years and they will pay for itafter the term.Task:a. Compute for each offer in option 1 and option 2.b. Which option will make a disadvantage for Odette and Johnson?

We need to compute interest amount under each option to make comparison.

The lending institution has two options which is: 1: They will offer an annual simple interest rate of 15% howev the year for 5 years. 2: They will offer an annual compound interest rate of 10% for he term.

The lending institution has two options which is: 1: They will offer an annual simple interest rate of 15% howev the year for 5 years. 2: They will offer an annual compound interest rate of 10% for he term.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 10P: The D.J. Masson Corporation needs to raise $500,000 for 1 year to supply working capital to a new...

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