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5. Bank loans Short-term financing through bank loans Consider this case: Mildred's Brewing Corp. needs to take out a one-year bank loan of $400,000 and
5. Bank loans Short-term financing through bank loans Consider this case: Mildred's Brewing Corp. needs to take out a one-year bank loan of $400,000 and has been offered loan terms by two different banks. One bank has offered a simple interest loan of 12% 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: Zebra Engineering Corp. 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 should accept the add-on interest loan, because it will be paying less money in interest due to the lower interest rate. O The company needs to evaluate more factors than just the interest rate before deciding which type of loan it should accept
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