What is the rear of the least expensive type of credit
The Proctor Company must arrange $235,000 financing for its working capital
requirements for the coming year. Proctor can (a) borrow from its bank on a
simple interest basis (interest payable at the end of the loan) for one year
at 7.8 percent simple rate, (b) borrow on a three-month, renewable loan at a
7.6 percent simple interest rate, or (c) borrow on an instalment loan basis at
6.0 percent add-on rate with 12 end-of-month payments. What is the rEAR of the
least expensive type of credit?
