21.

If a firm borrows $100M from a commercial bank with interest rate 8%. But the bank requires the firm to put 5% of the total borrowings in the bank as a compensating balance. Whats the real cost of the debt?

		5.0%
		8.42%
		9.56%
		8.0%

The four major elements in a firm's credit policy are (1) credit standards, (2) discounts offered, (3) credit period, and (4) collection policy.

True

False