2. Cash discount versus loanJoanne Germano works in an accounts payable department of a major retailer. She has attempted to convince her boss to take the discount on the 3/15 net 60 credit terms most suppliers offer, but her boss argues that giving up the 3% discount is less costly than a short-term loan at 11%. Prove to whoever is wrong that the other is correct.

(Note: Assume a 365-day year.)

The cost of giving up the cash discount is ______% Round two decimal places

6. Effective annual rateA financial institution made a $2,000,000, 1-year discount loan at 7% interest, requiring a compensating balance equal to 6% of the face value of the loan. Determine the effective annual rate associated with this loan.

(Note: Assume that the firm currently maintains $0 on deposit in the financial institution.)

The effective annual rate associated with the loan is _______%. Round to two decimal places