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Rockford Filing Ltd. requires $1 million in financing for a 45-day period. Three alternatives are being considered. (Use 365 year. Do not round intermediate
Rockford Filing Ltd. requires $1 million in financing for a 45-day period. Three alternatives are being considered. (Use 365 year. Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. Establish a line of credit with the bank at an interest rate of 10 percent. The bank will charge a fee of 1% to establish the li b. Forgo trade discounts from suppliers on terms of 2/15, net 60. c. Issue commercial paper for 45 days at a discount of 1.25 percent. a. What is the actual percentage cost of the line of credit? b. What would be the cost of forgoing the cash discount? c. What would be the Price and cost of commercial paper?
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a The actual percentage cost of the line of credit can be calculated using the formula Actual Percen...Get Instant Access to Expert-Tailored Solutions
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