A growing company plans to borrow IDR 1,000,000,000 for 5 years from a bank. Bank Sweet is willing to provide loans with an interest of 21% with installments every 6 months. Another bank, namely Bank Sour, is willing to provide a loan with a modest interest rate of 19%, to be paid every 6 months, but on the condition that the company must make a deposit for the repayment fund in the bank with an interest of 14% every 6 months. Which alternative should be chosen? Calculate the amount of savings that can be made every semester!

A growing company plans to borrow IDR 1,000,000,000 for 5 years from a bank. Bank Sweet is willing to provide loans with an interest of 21% with installments every 6 months. Another bank, namely Bank Sour, is willing to provide a loan with a modest interest rate of 19%, to be paid every 6 months, but on the condition that the company must make a deposit for the repayment fund in the bank with an interest of 14% every 6 months. Which alternative should be chosen? Calculate the amount of savings that can be made every semester!

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 24P

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