Frequently borrow money under an arrangement

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Companies frequently borrow money under an arrangement that requires them to make periodic payments of only interest and then pay the principal of the loan all at once. A company that manufactures odour control chemicals borrowed $400,000 for 3 years at 10% per year simple interest under such an arrangement. What is the difference in the total amount paid between this arrangement (Plan 1) and Plan 2, in which the company makes no interest payments at the end of each year?

Reference no: EM13806664

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