Question: Please do not copy and paste from another chegg, the numbers often vary and there are no proper examples of the equations used. Compensating balance

Please do not copy and paste from another chegg, the numbers often vary and there are no proper examples of the equations used.

Please do not copy and paste from another chegg, the numbers often

Compensating balance versus discount loan Weathers Catering Supply, Inc., needs to borrow $151,000 for 6 months. State Bank has offered to lend the funds at an annual rate of 8.7% subject to a 10.4% compensating balance. (Note: Weathers currently maintains $0 on deposit in State Bank.) Frost Finance Co. has offered to lend the funds at an annual rate of 8.7% with discount-loan terms. The principal of both loans would be payable at maturity as a single sum. a. Calculate the effective annual rate of interest on each loan. b. What could Weathers do that would reduce the effective annual rate on the State Bank loan? a. State Bank's semi-annual rate is \%. (Round to two decimal places.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

8.1. Dulles Electric Company buys 1 million tons of coal annually to burn at its power plant. The company wants to invest in a unit train that will haul coal from the mine to the power house, where...

See page 129- 137 on attachment for more details there are five steps to the project. Step 1: Create the loan amortization schedule for the property. Step 2: Create the depreciation schedule. Step 3:...

Income Statement of an interior design firm, Grand Designs, that makes money by selling hours (fees) and by selling furniture or other items (Sale of Goods). 1) Using the formula for Profit Margin,...

(Questions from Lecture and Article) - Discussion Board Activity I need to read the following Lecture Note and the ?Wall Street Journal? articles that I uploaded, and writeanswers for theDiscussion...

Can you please help me with questions 8 and 9 for Case 6..... I have answers to questions 1-7 if needed... Cases for Management Decision-Making CA-1 Suggested Uses of Cases Case Overview CASE 1 This...

Please read the attachment chapters and answer the following questions with at least 50 words. Depreciation discussion What are the various methods of determining depreciation and amortization...

informs Vol. 34, No. 3, May-June 2004, pp. 191-205 issn 0092-2102 \u0001 eissn 1526-551X \u0001 04 \u0001 3403 \u0001 0191 doi 10.1287/inte.1030.0068 2004 INFORMS Inventory Decisions in Dell's Supply...

These two questions is what I will present, and please read through the case first then answer these two questions. Thank you! 1. Suppose you expected the dollar to appreciate in value by 10% against...

I've attached the assignment as a word file, thanks! JWCL165_c07_304-355.qxd 7/31/09 2:05 PM Page 304 7 Fraud, Internal Control, and Cash Chapter STUDY OBJECTIVES After studying this chapter, you...

I have attached the corresponding lessons for assignment 8, it usually includes practice problems at the bottom that look similar to the assignment. ASSIGNMENT 7 JOB ORDER COSTING Directions: After...

What product is expected when 4-(dimethylamino)pyridine reacts with CH3I?

Adult Learning is potential research subject. What assumptions guide your research? Why is it important to outline the assumptions at the onset of your dissertation research project?

A _ _ _ _ _ _ _ is a payment on behalf of a payer that is guaranteed by the issuing bank - a common method in Asia, but much less common in the United States.

9. (15 points) A company is considering a new project that requires an investment of \$5 million. The project is expected to generate cash flows of $2 million in year 1,$3 million in year 2, and $4...

Ethical coordination. This would apply to the motivation of those in enterprises who were prepared to give up their personal time and make sacrifices for the good of the enterprise. The extent to...

soyuzno-respublicanskie (Union-republican, linked to affiliated ministries within the Soviet republics where there was a need for more management decentralization in industries such as...

Market coordination. The extent to which horizontal market linkages existed within the formal sector was minimal, or non-existent. Enterprises could be typified as having a lack of relationship with...