Montana Allied Products (MAP) must borrow $1.7 million to finance its working capital requirements. The bank has

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Montana Allied Products (MAP) must borrow $1.7 million to finance its working capital requirements. The bank has offered a 45-day simple interest loan with a quoted interest rate of 8 percent. Calculate the loan’s APR and r_EARassuming there is

(a) No compensating balance requirement

(b) A 15 percent compensating balance requirement, which MAP must satisfy from the loan proceeds.

(c) How much does MAP have to borrow so that it has $5.1 million to pay its bills if the loan requires a 15 percent compensating balance?

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ISBN: 978-1305666870

5th edition

Authors: Scott Besley, Eugene Brigham

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Question Posted: Feb 21, 2020 10:12 AM

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Montana Allied Products (MAP) must borrow $1.7 million to finance its working capital requirements. The bank has

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a Interest each 45 days 008453601500000 15000 APR 001 x 36045 008 80 r EAR 101 36045 10 ...View the full answer

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