b.	Calculate payment to suppliers assuming a 90-day payables period.

1. In exchange for a $490 million fixed commitment line of credit, your firm has agreed to do the following:

1.	Pay 2.1 percent per quarter on any funds actually borrowed.
2.	Maintain a 3 percent compensating balance on any funds actually borrowed.
3.	Pay an up-front commitment fee of 0.190 percent of the amount of the line.

a.	Ignoring the commitment fee, what is the effective annual interest rate on this line of credit?(Do not round intermediate calculations. Round the final answer to 2 decimal places.)

b.	Suppose your firm immediately uses $130 million of the line and pays it off in one year. What is the effective annual interest rate on this $130 million loan?(Do not round intermediate calculations. Round the final answer to 2 decimal places.)

2.

Ospika Products has projected the following sales for the coming year:

	Q1		Q2		Q3		Q4
Sales	$	940		$	1,020		$	980		$	1,080

Sales in the year following this one are projected to be 20 percent greater in each quarter.

a.	Calculate payments to suppliers assuming that Ospika places orders during each quarter equal to 30 percent of projected sales for the next quarter. Assume that Ospika pays immediately.(Round the final answers to 2 decimal places.)

b.	Calculate payment to suppliers assuming a 90-day payables period.

c.	Calculate payment to suppliers assuming a 60-day payables period.