Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

i need (e-1) answer pls Harper Engine Company needs $623,000 to take a cash discount of 2.50/10, net 85. A banker will loan the money

i need (e-1) answer pls
image text in transcribed
image text in transcribed
image text in transcribed
Harper Engine Company needs $623,000 to take a cash discount of 2.50/10, net 85. A banker will loan the money for 75 days at an interest cost of $18,300. 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 14.10 % 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? (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 12.31 % c. Should Harper borrow the money to take the discount? No O Yes d. If another banker requires a 10 percent compensating balance, how much must Harper borrow to end up with $623,000? (Round your answer to 2 decimal places.) Amount to be borrowed $ 692,222.20 e-1. What would be the effective interest rate in part d if the interest charge for 75 days were $16,300? (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.) No Yes

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Repo Handbook

Authors: Moorad Choudhry

1st Edition

0750651628, 978-0750651622

More Books

Students also viewed these Finance questions

Question

LO 14-3 What preparations to make before you start interviewing.

Answered: 1 week ago