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Harper Engine Company needs $689,000 to take a cash discount of 1.50/15, net 80. A banker will loan the money for 65 days at an
Harper Engine Company needs $689,000 to take a cash discount of 1.50/15, net 80. A banker will loan the money for 65 days at an interest cost of $16,200.
Harper Engine Company needs $689,000 to take a cash discount of 1.50/15, net 80. A banker will loan the money for 65 days at an interest cost of $16,200. a. What is the effective rate on the bank loan? (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 80 days instead of 15 days? (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? O No O Yes d. If another banker requires a 10 percent compensating balance, how much must Harper borrow to end up with $689,000? (Round your answer to 2 decimal places.) Amount to be borrowed e-1. What would be the effective interest rate in part dif the interest charge for 65 days were $11,100? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Effective rate of interestStep by Step Solution
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