Help Save & Edit So Silver Appliances purchases $18 million of inventory from its suppliers every year. They are looking to finance an increase in inventory of $1,800,000. Three alternatives are being considered: 1. Increase accounts payable: Supplier's terms are 2/10 net 60 and Silver Appliances has traditionally taken advantage of the discount paying their suppliers in 10 days. If Silver Appliances chooses to forego the discount, they would pay their suppliers in 60 days, instead of 10 2. Midland Bank will let Silver Appliances borrow the amount they need with the following conditions: Midland Bank requires a compensating balance of $90,000 be maintained by Silver Appliances at all times. The company currently has $10,000 on account with Midland that would count toward compensating balances. Midland Band will charge 11.00 percent interest per annum for the loan. 3. The Central Bank is offering to charge 10.00 percent interest per annum with no requirement for a compensating balance, but the loan would be discounted. Required: (Round all dollar figures to zero (0) decimal places (eg. $123.456) and all percentages to two (2) decimal places (e.g. 12.34%). a. Silver Appliances is wondering how much accounts payable will go up by and what the cost, in terms of an annual interest rate. of foregoing the cash discount is. 1. If Silver Appliances pays their suppliers in 60 days, what will be the increase in accounts payable? New Accounts Payable Help Save & Exit Required: (Round all dollar figures to zero (0) decimal places (e.g. $123,456) and all percentages to two (2) decimal places (eg. 12.34%). a. Silver Appliances is wondering how much accounts payable will go up by and what the cost, in terms of an annual interest rate, of foregoing the cash discount is. 1. If Silver Appliances pays their suppliers in 60 days, what will be the increase in accounts payable? New Accounts Payable old Accounts Payable Difference in Accounts Payable 2. What is the annual interest cost of foregoing the cash discount? b. If Silver Appliances decided to use a bank loan from Midland Bank to finance all $180,0000 needed: 1. How much would they have to borrow from Midland Bank? b. If Silver Appliances decided to use a bank loan from Midland Bank to finance all $180,0000 needed. 1. How much would they have to borrow from Midland Bank? 5:57 2. What is the effective rate being charged by Midland Bank? c. If Silver Appliances decided to use a bank loan from Central Bank to finance all $180,0000 needed 1. How much would they have to borrow from Central Bank? 2 What is the effective rate being charged by Central Bank? d. Which alternative would you choose? Suppliers Central Bank Midland Bank