1. A. 4950 B. 3825 C. 4500 D. 4050

2. A. 40875 B. 47006.25 C. 36787.5 D. 35743.76

a AaB Short-term financing through bank loans Consider this case: Gizmonic Institute Corp. needs to take out a one-year bank loan of $450,000 and has been offered loan terms by two different banks. One bank has offered a simple interest loan of i2% that requires monthly payments. The loan principal will be paid back at the end of the year. Another bank has offered 9% 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: Keedsler Motors Inc. always prefers simple interest loans over add-on interest loans because even if the interest rate is higher on the simple interest loan, its monthly payment is lower. O The company should only accept add-on interest loans when it cannot get simple interest loans O The company needs to be sensitive to interest rate differences between loan types and take them into consideration when deciding what type of loan to take out