Harper Engine Company needs $623,000 to take a cash discount of 2.50/10, net 85. A banker...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Harper Engine Company needs $623,000 to take a cash discount of 2.50/10, net 85. A banker will lend the money for 75 days at an interest cost of $18,300. a. What is the effective rate on the bank loan? Note: Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Effective rate of interest % b. How much would it cost (in percentage terms) if Harper did not take the cash discount but paid the bill in 85 days instead of 10 days? Note: Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Cost of not taking a cash discount c. Should Harper borrow the money to take the discount? d. If another banker requires a 10 percent compensating balance, how much must Harper borrow to end up with $623,000? Note: Round your answer to 2 decimal places. Amount to be borrowed e-1. What would be the effective interest rate in part d if the interest charge for 75 days were $16,300? Note: Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Effective rate of interest % e-2. Should Harper borrow with the 10 percent compensating balance requirement? (There are no funds to count against the compensating balance requirement.) O No Yes Harper Engine Company needs $623,000 to take a cash discount of 2.50/10, net 85. A banker will lend the money for 75 days at an interest cost of $18,300. a. What is the effective rate on the bank loan? Note: Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Effective rate of interest % b. How much would it cost (in percentage terms) if Harper did not take the cash discount but paid the bill in 85 days instead of 10 days? Note: Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Cost of not taking a cash discount c. Should Harper borrow the money to take the discount? d. If another banker requires a 10 percent compensating balance, how much must Harper borrow to end up with $623,000? Note: Round your answer to 2 decimal places. Amount to be borrowed e-1. What would be the effective interest rate in part d if the interest charge for 75 days were $16,300? Note: Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Effective rate of interest % e-2. Should Harper borrow with the 10 percent compensating balance requirement? (There are no funds to count against the compensating balance requirement.) O No Yes
Expert Answer:
Related Book For
Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
Posted Date:
Students also viewed these finance questions
-
The First Bank of Lending lists the following APR for loans. Determine the APY, or effective interest rate, for a loan amount that is $100,000 or more. Express your answer as a percentage rounded to...
-
Harper Engine Company needs $631,000 to take a cash discount of 2.5/20, net 75. A banker will loan the money for 55 days at an interest cost of $13,300. a. What is the effective rate on the bank...
-
Neveready Flashlights Inc. needs $346,000 to take a cash discount of 2/12, net 74. A banker will loan the money for 62 days at an interest cost of $10,500. a. What is the effective rate on the bank...
-
In a country with a fixed exchange rate system the rise of inflation will result in: O Home currency depreciation Currency appreciation in real terms Floating of home currency O Inflow of foreign...
-
Why does a single-price monopoly produce a smaller output and charge more than the price that would prevail if the market were perfectly competitive?
-
What elements will you include in the job specifi cations for a food server? a line cook? AppendixLO1
-
Discuss methods by which long- and short-term absence can be minimised? LO1
-
ProBuilder has the following June 30, 2016, fiscal-year-end unadjusted balances: Allowance for Sales Discounts, $0; and Accounts Receivable, $10,000. Of the $10,000 of receivables, $2,000 are within...
-
Leonardo, who is married but files separately, earns $80,000 of taxable income He also has $15.000 in city of Tulsa bonds. His wife, Theresa earns $50,000 of taxable income if Leonardo instead had...
-
Discussion post. In this module, we learn about thought leadership and why it is important for the changing role of the BA. In the initial response, develop your personal plan for becoming an...
-
Identify two significant concepts you have learned from each course You must have at least 6 courses with 12 total concepts. Identify the course in a heading, describe each concept, and explain why...
-
Use Trigonometric Identities to write each expression in terms of a single trigonometric identity or a constant. 1. cot sin 2. 1-sin sin20 1.) 2.) 3. sin 0 sec 0 cos 8 csc 8 cote 3.) Simplify the...
-
Quantitative models and using statistical analysis to evaluate the factors that drive markets, asset classes and individual securities. Would you invest based on a developed model? Why or why not?...
-
How does chronic stress relate to the development of psychosomatic disorders, and what holistic approaches are most effective in addressing these interconnected issues ?
-
You have been assigned PM responsibility for a product development project using untested cutting-edge technology that has the potential to disrupt the industry. The project owner will be the Mobile...
-
4. Consider the one-good model, in which output is produced with labour and capital. Then, as a result of offshoring (e.g. domestic firms buy the services of labour abroad electronically at the fixed...
-
Avatar Financials, Inc., located on Madison Avenue, New York City, is a company that provides financial advice to individuals and small- to mid-sized businesses. Its primary operations are in wealth...
-
Mediation is trying to resolve a damaging disagreement between colleagues by the intervention of a third person, whose neutrality is accepted by the parties. LOP1
-
Explain skills in mediation, which aims to resolve disagreements between individuals? LOP1
-
For a group, select a news report about a disagreement between parties, about which people in the group have at least a superficial knowledge. What would be a fruitful approach to settlement for a...
Study smarter with the SolutionInn App