5. Bank loans

Chapter 16

Bank loans Aa Aa Short-term financing through bank loans Consider this case: Atlantic Northern Inc. needs to take out a one-year bank loan of $600,000 and has been offered loan terms by two different banks. One bank has offered a simple interest loan of i 2% 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: Industrialization Automation Co. needs to borrow $10,000,000. The compeny has been affered both simple interest loan. O The company needs to evaluate more factors than just the intorest rate before deciding which type of loan it should accept The company should accept the add-on interest loan, becouse it will be paying less money in interest due to the lower interest rate. O MacBook 30