2 and 8

d. 3/10, net 90. 2. Reg is Clothiers can borrow from its bank at 17 percent to take a cash discount. Cash discount decision The terms of the cash discount are 3/19, net 45. Should the firm borrow the funds? (LO8-1) 3. Simmo ns Corp. can borrow from its bank at 17 percent to take a cash discount. Cash discount decision The terms of the cash discount are 1.5/10, net 45. Should the firm borrow the funds? (LO8-1) Effective rate of interest (LO8-2) Effective rate of interest (LO8-2) 4. Your bank will lend you $4,000 for 45 days at a cost of $50 interest. What is 5. A pawnshop will lend $2,500 for 45 days at a cost of 6. Sol Pine borrows $5,000 for one year at 13 percent interest. What is the effective 7. Mary Ott is going to borrow $10,400 for 120 days and pay $150 interest. What is 8. Dr. Ruth is going to borrow $5,000 to help write a book. The loan is for one your effective rate of interest? $35 interest. What is the effective rate of interest? Effective rate on discounted loan (LO8-2) rate of interest if the loan is discounted? the effective rate of interest if the loan is discounted? Effective rate on discounted loan (LO8-2) year and the money can either be borrowed at the prime rate or the LIBOR rate. Assume the prime rate is 11 percent and LIBOR 1.5 percent less. Also Prime vs. LIBO assume there will be a $45 transaction fee with LIBOR (this amount must be (L08-2) added to the interest cost with LIBOR). Which loan has the lower effective interest cost? 9. Gulliver Travel Agencies thinks interest rates in Europe are low. The firm Foreign