An organization needs to borrow a large amount of cash to fund its expansion plan. Which of the following annual interest rates is least expensive?
An organization needs to borrow a large amount of cash to fund its expansion plan. Which of the following annual interest rates is least expensive?
7 percent simple interest paid at the end of each year is the least expensive option because simple interest does not include additional complexities such as a compensating balance, discounting, or compounding. Other options either reduce the amount of borrowed cash available (compensating balance and discount interest) or increase the amount owed over time due to compounding.
pls explain