How much interest will be paid under each scenario

Reference no: EM13246326

A company that manufactures in-line mixers for bulk manufacturing is considering borrowing $1.25 million to update a production line.If it borrows the money now, it can do so at an interest rate of 8%per year simple interest for 4 years. If it borrows next year, the interest rate will be only 6% per year, but the interest will be compound interest for 3 years.
How much interest (total) will be paid under each scenario? Should the company now or 1 year from now? Assume the total amount due will be paid when the loan is due in either case.

Reference no: EM13246326

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