Computing ratios impacted by extra debt

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Reference no: EM1310246

1) Your company borrows $25,000 from bank at 12% compounded annually to buy some new machinery. This loan is to be repaid in equal instalments at end of each year over the next five years. How much will each annual payment be? What ratios would be impacted by extra debt? How would you give explanation for this purchase to management?

2) Your company is considering depositing money in one of 3 banks, all of which pay 5% interest; bank A compounds annually, bank B compounds semi-annually, and bank C compounds daily. Which bank would you select? Describe why?

Reference no: EM1310246

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