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A bank offers two options of loans for house buyers. Option A is annual-rest at a quoted rate of 5.25% per annum. Option B is monthly-rest at 5.5% per annum. Both options require repayment by monthly installments in arrears. You consider a loan amount of 8800,000.

(a) If a 10-year loan is required, which option should be preferred?

(b) What is your answer for a 20-year loan?

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Financial Management, Finance

Category:- Financial Management
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