J. D. Chamberlain has recently negotiated a working capital loan of $500,000 for Jarol Hotels. The loan
Question:
J. D. Chamberlain has recently negotiated a working capital loan of $500,000 for Jarol Hotels. The loan agreement has a stated annual interest rate of 12%. In addition, Carol Farmer, the vice president, has negotiated a 3% cash discount for a furniture and equipment purchase of $200,000. The terms are 3/10, 1/30.
Required:
1. Determine the effective interest rate of the working capital loan if a 10%
compensating balance is required.
2. Determine the effective interest rate of the cash discount.
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Related Book For
Financial Management For The Hospitality Industry
ISBN: 9780131179097
1st Edition
Authors: William P Andrew, James W Damitio
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