How much interest will you save on this loan

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Question - You are the owner of four Taco Bell restaurant locations. You have a business loan with Citizens Bank taken out 60 days ago that is due in 90 days. The amount of the loan is $50,000, and the rate is 9.5% using ordinary interest.

You currently have some excess cash. You have the choice of sending Citizens $35,000 now as a partial payment on your loan or purchasing an additional $35,000 of serving supplies such as food containers, cups, and plastic dinnerware for your inventory at a special discount price that is "10% off" your normal cost of these items.

(a) How much interest (in $) will you save on this loan if you make the partial payment and don't purchase the additional serving supplies?

(b) How much (in $) will you save by purchasing the discounted serving supplies and not making the partial payment?

(c) What other factors should you consider before making this decision?

Reference no: EM132815380

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