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YOUR company needs external financing. As VP for Finance, you approach three banks for a three-year P5,000,000 loan. All three banks quoted a rate of
YOUR company needs external financing. As VP for Finance, you approach three banks for a three-year P5,000,000 loan. All three banks quoted a rate of 12 percent per annum, payable in equal monthly installments.
The interest calculations are as follows:
Bank X flat basis Bank Y annual rest basis Bank Z reducing balance basis Compute the Effective Annual Rate for the three banks. Show your computations. As borrower, which bank would you choose? Explain.
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