Based solely on their effective costs which financing


Financing Alternative

Effective Cost

Trade Credit

17.81%

Simple Interest Loan

13.02%

Add-On Interest Loan

14.04%

1) Based solely on their effective costs, which financing option should a firm choose?

a)      a) Add-on interest bank loan

b)      b) Use supplier trade credit

c)       c) Simple interest bank loan

 

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Finance Basics: Based solely on their effective costs which financing
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