Question

ttempts: tention: Due to a bug in Google Chrome, this page may not function correctly. Click here to learn more. 11. Bank loans Average: 13 Aa Aa Short-term financing through bank loans Consider this case: Mildred's Brewing Corp. needs to take out a one-year bank loan of $500,000 and has been offered loan terms by two different banks. One bank has offered a simple interest loan of 10% that requires monthly payments. The loan principal will be paid back at the end of the year. Another bank has offered 7% add-on interest to be repaid in 12 equal monthly installments Based on a 360-day year, what will be the monthly payment for each loan for November? (Hint: Remember that November has 30 days.) Value Simple interest monthly payment Add-on interest monthly payment Choose the answer that best evaluates the following statement: Mall Toys Co. needs to borrow $10,000,000. The company has been offered both simple interest and add-on interest loans. The add-on interest loan has a significantly lower interest rate than the simple interest loan. O The company needs to evaluate more factors than just the interest rate before deciding which type of loan it should accept. The company should accept the add-on interest loan, because it will be paying less money in interest due to the lower interest rate. st Plyr WIN 32,0,0,17 Q333-1 2004-2016 Apla A, right,reserved Grade It Now Continue without saving

Answer 1

1.
=500000*10%/12=4166.66666666667

2.
=500000*(7%+1)/12=44583.3333333333

3.
The company needs to evaluate more factors than just the interest rate before deciding which type of loan it should accept