Question 11

1. 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 $15,481, and they can borrow the money from Bank A, which has offered to lend the firm $15,481 for 1 month(s) at an APR (compounded) of 14%. The bank will require a (no-interest) compensating balance of 8% of the face value of the loan and will charge a $176 loan origination fee, which means Hand-to-Mouth must borrow even more than the $15,481?

   NOTE: Answer in percentages. If your answer is 0.0204, you must answer 2.04. Do not use the "%" sign.