CS Professional · Strategic Management and Corporate Finance · Raising of Funds - Non Fund Based
Mehta Infra Ltd obtains a financial bank guarantee of ₹2,50,00,000 for 2 years. The bank charges commission at 1.6% per annum, charged yearly on the full amount. What is the total commission payable over the 2 years?
Total commission is ₹8,00,000. The annual commission is 1.6% of ₹2.5 crore, which is ₹4,00,000, and over two years it doubles to ₹8,00,000.
- A₹4,00,000
- B₹8,00,000Correct
- C₹6,40,000
- D₹10,00,000
Explanation
Annual commission = 2,50,00,000 × 1.6% = ₹4,00,000. Over 2 years = ₹8,00,000. The ₹4,00,000 option covers one year only; ₹6,40,000 wrongly applies 1.6% to ₹4 crore base.
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