EOY Cash Flow (M$) ΕΟΥ Cash Flow (M$) 0. -$12 4 $5 -$1 $5 $5 $2 3 $2 7 $5 If the i = 10% What is the AW, is it a good idea based on AW decision rule? O 2.171 yes .6039 yes 0 .7503 yes O-1.486 no .2175 no

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.