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a. What interest rate would make it worthwhile to incur a compensating balance of $17,000 in order to get a 1-percent lower interest rate on
a. What interest rate would make it worthwhile to incur a compensating balance of $17,000 in order to get a 1-percent lower interest rate on a 1-year, pure discount loan of $260,000 ? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.) b. Is it worth incurring the compensating balance to obtain the lower rate? Yes No Problem 14-23 Optimal Upper Cash Limit (LG14-8) Veggie Burgers, Inc. would like to maintain its cash account at a minimum level of $257,000 but expects the standard deviation in net daily cash flows to be $13,200, the effective annual rate on marketable securities to be 3.5 percent per year, and the trading cost per sale or purchase of marketable securities to be $33.50 per transaction. What will be its optimal upper cash limit? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
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