Question 01

Company A is currently cash-constrained, and must make a decision about whether to delay paying one of its suppliers, or taking out a loan. They owe the supplier $14,261, and they can borrow the money from Bank A, which has offered to lend the firm $14,261 for 1 month(s) at an APR (compounded) of 17%. The bank will require a (no-interest) compensating balance of 7% of the face value of the loan and will charge a $226 loan origination fee, which means Hand-to-Mouth must borrow even more than the $14,261? NOTE: Answer in percentages. If your answer is 0.0204, you must answer 2.04. Do not use the "%" sign.

Question 02

Company A is currently cash-constrained, and must make a decision about whether to delay paying one of its suppliers, or taking out a loan. They owe the supplier $12,703, and they can borrow the money from Bank B, which has offered to lend the firm $12,703 for 1 months at an APR of 15% (compounded). The loan has a 2.77% loan origination fee. What would be the cost for Company A if they decide to borrow from Bank B? NOTE: Answer in percentages. If your answer is 0.0204, you must answer 2.04. Do not use the "%" sign.