Your company is considering three options for financing its short term operations: i. Borrow Tk.20 million from
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Question:
Your company is considering three options for financing its short term operations:
i. Borrow Tk.20 million from Shuktara Bank at 12 percent interest rate and a 15 percent compensating balance requirement signing a 60 day promissory note.
ii. Borrow Tk.20 million from Chandramukhi Bank at 12 percent discount interest.
iii. Forego discount on a trade credit on terms 2/15, net 45.
Strictly based on effective cost, which option would you select and why?Explain?
Related Book For
Essentials of Managerial Finance
ISBN: 978-0324422702
14th edition
Authors: Scott Besley, Eugene F. Brigham
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