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These questions go hand in hand. Please help!! You are an analyst in the Treasury department of Bennett Inc., a multinational firm. You have been
These questions go hand in hand. Please help!!
You are an analyst in the Treasury department of Bennett Inc., a multinational firm. You have been tasked with answering questions the Treasurer has regarding short-term investing and short-term borrowing. Below are numbers that your assistant has researched for you to answer these questions. Discount rate on company's Commercial paper 1.00% Discount rate on money market securities for investing 3.00%) Dealers annual fee percent on commercial paper 0.15% Marginal tax rate 35% Yield on Municipal bonds 2.00% Short-term portfolio beginning of year value 250000.00 Short-term portfolio end of year value 257000.00 Line of Credit with the Bank 350,000.00 Interest Rate on bank lending 5% Commitment Fee percentage on line of credit 0.50%) Compensating Balance percentage on line of credit 10% QUESTION 9 Suppose the company plans to borrow the entire line of credit amount of $350,000. Given the interest rate and compensating balance rate as given above, what is the effective annual cost of the line of credit? [Note: No commitment fee is required.] O a. 5.56% O b.7.43% O c 10% O d. 11% QUESTION 10 For the previous question, what would be the specific dollar amount of the interest expense? O a $15,000 O b.$21,400 O c $17,500 O d. $32,500Step by Step Solution
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