Your friend has offered to lend you some money. You decide to borrow $1,800 and agree to pay back $2,000 in 2 years. Alternatively, you could borrow $1,800 for two years from your bank that is charging 4.5% per annum. Explain which option you should choose, showing computations.
Your friend has offered to lend you some money. You decide to borrow $1,800 and agree to pay back $2,000 in 2 years. Alternatively, you could borrow $1,800 for two years from your bank that is charging 4.5% per annum. Explain which option you should choose, showing computations.
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 14P
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Question
Your friend has offered to lend you some money. You decide to borrow $1,800
and agree to pay back $2,000 in 2 years. Alternatively, you could borrow $1,800
for two years from your bank that is charging 4.5% per annum. Explain which
option you should choose, showing computations.
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