Craig is considering four loans. Loan L has a nominal rate of 8. 254%, compounded daily. Loan M has a nominal rate of 8. 474%, c
1 answer:
<em><u>Loan L</u></em> would be best for Craig that has a nominal rate of 8.254% that is compounded daily a sit gives an<u> effective rate of interest</u> as 117.95.
The formula for <u>computing compounded rate</u> of interest is given as follows:
The effective rate of interest for loan L as per the above formula would be:
The effective rate for loan M would be:
The effective rate for loan N would be:
The effective rate for loan O would be:
Learn more about the effective rate of interest here:
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Please see attachment and assumptions
Explanation:
<h2>Please note that the assumption is that the full question is as follows .</h2><h2>You are making the inventory decisions for an international company that sells bathing suits. The product has a forecasted daily demand with mean 100 and standard deviation 36. The selling season only lasts 6 months since bathing suits are a seasonal item. You are procuring the product from your factory in China (out-sourcing) and as a result the lead time is so long (6 months) that you can only place only one order per selling season (6 months before the season begins). You want to ensure a service level of 97.5% and the cost of capital of the firm is 20% (that is, the firm faces an annual interest rate of 20%). Shipping cost is $4,500 while procurement cost (purchase cost) per item is $5.</h2><h2>1.How many bathing suits should you order from your factory in China? </h2><h2>2.What is the total holding cost? </h2><h2>3.What is the total ordering cost?</h2>