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Choose the ii) Sri Kantan Ltd. has the alternatives to have additional short term funds of RM1,800,000. It has excellent relationships with its bank and
Choose the ii) Sri Kantan Ltd. has the alternatives to have additional short term funds of RM1,800,000. It has excellent relationships with its bank and its suppliers, and a highly respectable credit rating in general. The company maintains normal deposit balances of RM20,000. The following credit sources are available: 1) Commercial paper bearing a 8% interest rate. The dealer will charge an annual fee of RM1,800. 2) A 12% discounted interest loan from the bank will require a 10% compensating balance. Calculate the cost of effective credit for each alternative. Which source of funds should Sri [CLO 1:C3][10 marks] Kantan utilize first
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