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There are three alternatives to increase each financing alternative is for a full year.) (1) Forego cash discounts with the terms of 2/10et 40. (2)
There are three alternatives to increase each financing alternative is for a full year.) (1) Forego cash discounts with the terms of 2/10et 40. (2) Borrow the money at 7 percent from the bank on a regular basis. This bank 8-2 net working capital by $10,000.(Assume loan requires a minimum compensating balance of 20 percent. (3) Sell commercial paper at 8 percent. The underwriting fees of the issue are 2 percent of the face value. Calculate the effective annual interest rate of each alternative
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