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A company earns about 13% annual interest rate from its normal course of business activities. Two loan alternatives are made available for the said company
A company earns about 13% annual interest rate from its normal course of business activities. Two loan alternatives are made available for the said company which can be used for business investment: Alternative A: Accept an 11% loan to be repaid in 6 equal end-of-year installments. Alternative B: Accept a 12% loan that would be paid in 10 equal end-of-year installments. To maximize worth, which alternative is better? Show your calculations in your solutions, and compare the final values for each alternative. (15 pts)
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