Question

Company X got a loan of e4,000,000. The company agreed repay this loan as follows: a first payment of e2,400,000 one year from now and a second payment of 2,200,000 within two years. The tax rate is 25%. Determine the cost of this loan

Answer 1

The cost of loan is $600000.

Step-by-step explanation:

The loan amount = 4000000

The cost of loan refers to the interest rates and other charges that borrower pays. So in the given question first installment is 2400000 in the first year and second installment is 2200000. Here, lets assume any amount other then actual amount of loan amount is the amount spent on loan.

So, the cost of loan = (2400000 + 2200000) – 4000000 = $600000