Burt's Department Store needs $602,000 to take a cash discount of 2.50/10, net 110. A banker will loan the money for 100 days at an interest cost of $14,600.

a.What is the annual rate on the bank loan?(Use 365 days in a year. Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Annual rate%

b.How much would it cost (in percentage terms) if Burt's did not take the cash discount and paid the bill in 110 days instead of 10 days?(Use 365 days in a year. Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Cost of not taking a cash discount%

c.Should Burt's borrow the money to take the discount?

• No
• Yes

d.If the banker requires a 10 percent compensating balance, how much must Burt's borrow to end up with the $602,000?(Round the final answer to the nearest whole dollar.)

Amount to be borrowed$

e-1.What would be the interest rate in partdif the interest charge for 100 days were $23,000?(Use 365 days in a year. Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Annual rate%

e-2.Should Burt's borrow with the 10 percent compensating balance? (There are no funds to count against the compensating balance requirement.)

• No
• Yes