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A company has a choice between taking a $232k loan or accepting a cash discount terms 2.89/19, net 75. A creditor will loan the money
A company has a choice between taking a $232k loan or accepting a cash discount terms 2.89/19, net 75. A creditor will loan the money for 2 years at an interest cost of $12.2k. The creditor requires a 20% compensating balance. However, the company ordinarily maintains 51% of that requirement. If the company takes the loan, it must provide monthly payments to retire the obligation. Note: The term "k" is used to represent thousands ($1,000). Required: What is the absolute percentage difference in the effective rate of interest (ERI) between the two alternatives? % Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places (for example: 28.31%)
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