Multiple Choice.....

1. Analog Computers needs to borrow $860,000 from the Midland Bank. The bank requires a 19% compensating balance. How much money will Analog need to borrow in order to end up with $860,000 spendable cash? (Round your answer to the nearest dollar amount)

A. $1,061,728

B. $1,023,400

C. $1,750,704

D. $1,556,600

2. Mr. Jones borrows $2,600 for 90 days and pays $31 interest. What is his effective rate of interest? (Use 360 days in a year. Round your answer to 2 decimal places.)

A. 4.77%

B. 5.31%

C. 7.07%

D. 9.47%

3. Friedman Roses, Inc. needs $77,000 in funds for expansion. With a compensating balance requirement of 20%, how much will the firm need to borrow? (Round your answer to the nearest dollar amount)

A. $96,250

B. $19,250

C. $77,000

D. $96,300