Refer to the information provided in Problem 168. To borrow the funds it needs, MAP had to

Question:

Refer to the information provided in Problem

16–8. To borrow the funds it needs, MAP had

to agree to a simple interest loan that required

a 15 percent compensating balance. Suppose

that MAP needs $5.1 million to pay bills that are

currently due. (a) If it does not normally maintain

a cash balance at the bank, how much must

MAP borrow? (b) If it normally maintains a cash
$500,000 balance at the bank, how much must
MAP borrow? In this case, what is the loan’s APR
and rEAR?

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Cfin4 Plus Coursemate Printed Access Card 2014

ISBN: 9781285434544

1st Student Edition

Authors: Scott Besley, Eugene F. Brigham

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Refer to the information provided in Problem 168. To borrow the funds it needs, MAP had to

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Cfin4 Plus Coursemate Printed Access Card 2014

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