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Homework answers / question archive / Mr Habib, a newsagent in a rural village, has decided to purchase a new freezer cabinet and microwave oven/roasting unit to provide hot meals for village workers and for students at the secondary school, which serves the surrounding area which is located half a mile from the village
Mr Habib, a newsagent in a rural village, has decided to purchase a new freezer cabinet and microwave oven/roasting unit to provide hot meals for village workers and for students at the secondary school, which serves the surrounding area which is located half a mile from the village. The total cost of the units is OMR 950.
Based on the given scenario answer the following tasks:
IV. Based on the above understanding conclude your task on explaining which is the most appropriate
source of short-term finance for Mr. Habib. (10 marks)
answer in 100 words please
ANSWER
Most appropriate short term financing instrument will be Purchasing the microwave and freezer through an EMI (equal monthly installment option)
in this he needs to pay certain equal amount for certain months till the time the money payable becomes zero. main thing to notice here is company generally add interest component to the purchase price which makes it expensive for deferred payment,.
An equated monthly installment (EMI) "A fixed payment amount made by a borrower to a lender at a specified date each calendar month. Equated monthly installments are used to pay off both interest and principal each month, so that over a specified number of years, the loan is fully paid off along with interest."
The benefit of an EMI for borrowers is that they know precisely how much money they will need to pay toward their loan each month, making the personal budgeting process easier.
