Question
A borrower is offered two loan options: • Loan
A: ₹50 lakh @ 9.5% with 1.5% upfront fee • Loan B: ₹50 lakh @ 10% with no fee Which is cheaper assuming 1-year duration?Solution
Loan A effective cost = 9.5% + 1.5% = 11% (fee capitalized) Loan B = 10% ✅ Cheaper: Loan B
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