Neveready Flashlights Inc. needs $$340,000$ to take a cash discount of $\frac{3}{17},$ net $72.$ A banker

will lend the money for $55$ days at an interest cost of $$10,400.$

What is the effective rate on the bank loan? tion in mind.

How much would it cost $($in percentage terms$)$ if the firm did not take the cash discount, but

paid the bill in $72$ days instead of $17$ days?

Should the firm borrow the money to take the discount?

No

Yes

I don't know

Sometimes

If the banker requires a $20$ percent compensating balance, how much must the firm borrow to

end up with the $$340,000?$

What would be the effective interest rate in part $d$ if the interest charge for $55$ days were

$$13,000?$ Should the firm borrow with the $20$ percent compensating balance? $($The firm has

no funds to count against the compensating balance requirement.$)$

$3\mathrm{.}0\%$

$6\mathrm{.}55\%$

$6\mathrm{.}0\%$

$5\mathrm{.}0\%$