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Interest in Advance versus Interest Paid When Loan Is Due On July 1 2008 Moton Company needs exactly $206400 in cash to pay an existing obligation Moton has decided to borrow from State Bank

Interest in Advance versus Interest Paid When Loan Is Due

On July 1, 2008, Moton Company needs exactly $206,400 in cash to pay an existing obligation.

Moton has decided to borrow from State Bank, which charges 14% interest on loans. The loan will

be due in one year. Moton is unsure, however, whether to ask the bank for (a) an interest-bearing

loan with interest and principal payable at the end of the year or (b) a non-interest-bearing loan

due in one year but with interest deducted in advance.

May 03 2020 Read more Less More

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