Mrs. Maria Alading borrowed 20,000 pesos from her friend Ms. Petra Hausen to pay the tuition fee of her son. How much money will she pay Mrs. Hausen after a year, if an annual simple interest rate of 12 % is asked?

Mrs. Maria Alading borrowed 20,000 pesos from her friend Ms. Petra Hausen to pay the tuition fee of her son. How much money will she pay Mrs. Hausen after a year, if an annual simple interest rate of 12 % is asked?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

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