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A business needs a $240,000 loan for one year and has two options to

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A business needs a $240,000 loan for one year and has two options to  [#permalink]

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New post Updated on: 20 Nov 2019, 06:25
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Question # 51, Date : 20-Nov-2019
This post is a part of Project IR Butler 2019-20. Click here for Details


A business needs a $240,000 loan for one year and has two options to decide between. Option 1 is a fixed rate loan for the entire amount, with a simple annual interest rate of 5%. Option 2 involves two loans: a fixed rate loan for $190,000, with a simple annual interest rate of 4%, and a second fixed rate loan for $50,000, with a simple annual interest rate of r%. Both options have otherwise identical terms and require payment in full of interest and principal at the end of the year.

In the first column, identify the interest rate r% at which the two options require the same total interest payment. In the second column, identify the interest rate r% at which the annual interest on the $190,000 loan in Option 2 would be exactly twice the annual interest on the $50,000 loan. Make only two selections, one in each column.
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Originally posted by mbaaspirant80 on 28 Aug 2017, 08:37.
Last edited by SajjadAhmad on 20 Nov 2019, 06:25, edited 2 times in total.
Updated - Complete topic (102).
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Re: A business needs a $240,000 loan for one year and has two options to  [#permalink]

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New post 01 Sep 2017, 21:33
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i want to know the answer for this question
i got 8.8% for first column and 7.6% for second column
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Re: A business needs a $240,000 loan for one year and has two options to  [#permalink]

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New post 20 Nov 2019, 06:25
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Re: A business needs a $240,000 loan for one year and has two options to   [#permalink] 20 Nov 2019, 06:25
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