To maximize worth which alternative is better

Reference no: EM133300630

Topic: A company earns about 13% annual interest rate from its normal course of business activities. Two loan alternatives are made available for the said company which can be used for business investment:

Alternative A: Accept a 10% loan that would be paid in 5 equal end-of-year installments.

Alternative B: Accept an 11% loan to be repaid in 10 equal end-of-year installments.

Question: To maximize worth, which alternative is better? Show your calculations in your solutions, and compare the final values for each alternative.

Reference no: EM133300630

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