Saint Joseph County usually experiences seasonality in its cash balances. In December, tax revenues from taxpayers increase its cash balance, and then these balances are used throughout the following year. By the fall, the County has a tight cash flow. It has a Line Of Credit (LOC) with its bank, Indiana University Credit Union, which allows it to draw up to $900,000 at 4 percent interest per year. The County is planning to draw down $450,000 on March 1 and repay it at the start of business on May 31 this year—exactly 92 days later.

 

Question 1. Calculate the interest that the County should pay on May 31 (Show how you calculate it).

 

Question 2. How much (i.e., principal plus interest) should the County pay back on May 31? (Show how you calculate it).

Answer rating: 100% (QA)

To calculate the interest that the County should pay on May 31 we need to ... View the full answer