(Solution) 13) Neveready Flashlights Inc. Needs $346,000 To Take A Cash Discount Of 2/12, Net 74. A Banker Will Loan The Money For 62 Days At An Interest Cost... | Snapessays.com


(Solution) 13) Neveready Flashlights Inc. needs $346,000 to take a cash discount of 2/12, net 74. A banker will loan the money for 62 days at an interest cost...


13)Neveready Flashlights Inc. needs $346,000 to take a cash discount of 2/12, net 74. A banker will loan the money for 62 days at an interest cost of $10,500.    a. What is the effective rate on the bank loan? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)     Effective rate of interest %     b.  How much would it cost (in percentage terms) if the firm did not take the cash discount but paid the bill in 74 days instead of 12 days? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)     Cost of not taking a cash discount %       c.  Should the firm borrow the money to take the discount?       No Yes   d.  If the banker requires a 20 percent compensating balance, how much must the firm borrow to end up with the $346,000?     Amount to be borrowed $       e-1. What would be the effective interest rate in part d if the interest charge for 62 days were $12,300? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)     Effective rate of interest %       e-2. Should the firm borrow with the 20 percent compensating balance requirement? (The firm has no funds to count against the compensating balance requirement.)       Yes No

 


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This question was answered on: May 23, 2022

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