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MrRissso [65]
3 years ago
7

Summit Record Company is negotiating with two banks for a $150,000 loan. Fidelity Bank requires a compensating balance of 26 per

cent, discounts the loan, and wants to be paid back in four quarterly payments. Southwest Bank requires a compensating balance of 13 percent, does not discount the loan, but wants to be paid back in 12 monthly installments. The stated rate for both banks is 12 percent. Compensating balances will be subtracted from the $150,000 in determining the available funds in part a. a-1. Calculate the effective interest rate for Fidelity Bank and Southwest Bank.
Business
1 answer:
BaLLatris [955]3 years ago
8 0

Answer and Explanation:

The computation of the effective interest rate is shown below:

For Fidelity bank

= (2 × 4 × $150,000 × 0.12) ÷ (4 +1 )× ($150,000 - $18,000 - ($150,000 × 26%)

= 30.97%

For southwest bank

= (2 × 12 × $150,000 × 0.12) ÷ (12+1 )× ($150,000 - ($150,000 × 13%)

= 25.46%

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to provide honest and realistic recommendations and conclusions in the execution of one's duties

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6 0
3 years ago
You are offered Birr 1,000 today, Birr 10,000 in 12 years, or Birr 25,000 in 25 years. Assuming that you can earn 11 percent on
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Based on the amounts that you are offered and their present values, the offer you should pick is Birr 10,000 in 12 years.

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You should pick the offer with the highest present value.

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= Birr 1,000

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4 0
2 years ago
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Answer:

Present Value= $18,181.82

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4 0
3 years ago
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5 0
2 years ago
A company has decided to discontinue a component of its business but, when the reporting period ends, the component has not yet
azamat

Answer: income from operations for the year and the amount by which the component’s fair value less cost to sell is less than book value

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