A.

Which one of the following liabilities frequently requires the borrower to repay the debt in full for a short period of time before re-borrowing on the account?

notes payable

accounts payable

line of credit

compensating balance account

B.

A compensating balance:

can only be applied to the amount of a credit line that is actually used.

increases the cost of debt.

offsets the majority of a loans cost of interest.

could be as high as 15 percent of the loan amount.

C.

Your firm has an average collection period of 25 days. Current practice is to factor all receivables immediately at a discount of 1.5 percent.

What is the effective cost of borrowing in this case? (Do not round intermediate calculations. Enter your answer as a pecent rounded to 2 decimal places, e.g., 32.16.)