Ambidex Is Considering a Bank Loan of $1,800,000 to Update

question 10

Multiple Choice

Ambidex is considering a bank loan of $1,800,000 to update its information system technology. It is expecting to finance the loan over five years, with annual payments, at an interest rate of 12%, compounded annually. Which of the following would provide the least cost alternative to Ambidex?

• A) Maintain the current terms.
• B) Make a down payment of 5% of the principle.
• C) Spread the payments over eight years instead of five years.
• D) Pay at the beginning, instead of at the end of the year.
• E) Make quarterly payments instead of annual ones.

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Definitions:

Fibrous Capsule

A dense layer of connective tissue that surrounds organs, such as the kidney and liver, providing protection and structural support.

Synovial Membrane

A soft tissue lining the space inside synovial joints, producing synovial fluid to lubricate and nourish the cartilage and bones in the joint cavity.

Fibrous Capsule

A dense connective tissue layer that encloses certain organs, providing support and protection.

Double Layer

A concept referring to structures with two layers, often used in the context of biological membranes which consist of two layers of phospholipids.