Question
1.) You've worked out a line of credit arrangement that allows you to borrow up to $60 million at any time. The interest rate is
1.) You've worked out a line of credit arrangement that allows you to borrow up to $60 million at any time. The interest rate is .575 percent per month. In addition, 6 percent of the amount that you borrow must be deposited in a noninterest-bearing account. Assume that your bank uses compound interest on its line-of-credit loans.
a.What is the effective annual interest rate on this lending arrangement?(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Effective annual rate%
b.Suppose you need $15.98 million today and you repay it in eight months. How much interest will you pay?(Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Total interest paid$
2.) Calvani, Inc., has a cash cycle of 42 days, an operating cycle of 60 days, and an inventory period of 25.5 days. The company reported cost of goods sold in the amount of $350,000, and credit sales were $573,000.
What is the company's average balance in accounts payable and accounts receivable?(Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Average accounts payable $
Average accounts receivable $
3.) Come and Go Bank offers your firm adiscountinterest loan with an interest rate of 8 percent for up to $24 million, and in addition requires you to maintain a 1 percent compensating balance against the face amount borrowed.
What is the effective annual interest rate on this lending arrangement?(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Effective annual rate%
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