Company A is currently cash-constrained, and must make a decision about whether to delay paying one of its suppliers, or taking out a loan. They owe the supplier $23345, and they can borrow the money from Bank A, which has offered to lend the firm $23345 for 2 month(s) at an APR (compounded) of 15%. The bank will require a (no-interest) compensating balance of 7% of the face value of the loan and will charge a $216 loan origination fee, which means Hand-to-Mouth must borrow even more than the $23345. Compute the EAR of the loan. Give typing answer with explanation and conclusion

19. The treasurer of Pharmally  Manufacturing Company is faced with three alternative bank loans. The firm wishes to select  the one that minimizes its cost of credit  on a P200,000 note  that it plans to issue in the next 10 days. relevant information for the three  loan configurations is as follows:    A.  An 18% rate of interest with interest paid at the end of the loan period and no  compensating                   balance requirement.    B.  A 16% rate of interest and a 20% compensating balance requirement. this loan also calls for                        interest     to be paid at the  end of the loan period.    C. A 14% rate of interest  that is discounted  plus a 20% compensating balance requirement.What is the effective cost of credit  of Alternative B?

On December 31, 2025, Bonita Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Bonita Co. agreed to accept a $328,100 zero-interest-bearing note due December 31, 2027, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 11%. Bonita is much more creditworthy and has various lines of credit at 6%. (a) Prepare the journal entry to record the transaction of December 31, 2025, for the Bonita Co. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and final answers to O decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries) Date Account Titles and Explanation Dec 31, 2025 Debit Credit

A wholesale company needs to borrow $600,000 to finance inventory for the upcoming seasonal rush. Royalty Bank has offered to finance the inventory at 8% provided that the company keeps a compensating balance in its operating account of 10%. A) How much must the distributor borrow to end up with the $600,000? B) What is the effective rate of interest on this borrowing? [ [Show detailed calculation with a formula where applicable]

To ensure that, along with spontaneous financing from accounts payable and accruals, adequate short-term financing will be available, Morton plans to establish an unsecured short-term borrowing arrangement with its local bank, Third National. The bank has offered either a line-of-credit agreement or a revolving credit agreement. Third National's terms for a line of credit are an interest rate of 2.50% above the prime rate, and the borrowing must be reduced to zero for a 30-day period during the year. On an equivalent revolving credit agreement, the interest rate would be 3% above prime with a commitment fee of 0.50% on the average unused balance. Under both loans, a compensating balance equal to 20% of the amount borrowed would be required. The prime rate is currently 7%. Both the line-of-credit agreement and the revolving credit agreement would have borrowing limits of $1,000,000. For purposes of his analysis, Morton estimates that Kanton will borrow $600,000 on the average during the…

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Neveready Flashlights Inc. needs $340,000 to take a cash discount of 3/17, net 72. A banker will lend the money for 55 days at an interest cost of $10,400. What is the effective rate on the bank loan? tion in mind. 20.04% 3.06% 4.25% 10% How much would it cost (in percentage terms) if the firm did not take the cash discount, but paid the bill in 72 days instead of 17 days? 3.0% 97% 6.55% 15% Should the firm borrow the money to take the discount? No Yes I don't know Sometimes If the banker requires a 20 percent compensating balance, how much must the firm borrow to end up with the $340,000? $10,000 $1,000 $100,000 ○ $425,000 What would be the effective interest rate in part d if the interest charge for 55 days were $13,000? Should the firm borrow with the 20 percent compensating balance? (The firm has no funds to count against the compensating balance requirement.) 3.0% 6.55% 6.0% 5.0%

Read each of the following statements, and indicate which overdraft protection arrangement is being described. • This program frequently necessitates transfers of fixed increments (e.g., $100) and may result in greater-than-desired transfers and resulting interest charges. This describes: • This program often requires the annual fees or cash-advance feer of credit or a bank-issued credit card, and incur interest charges and An automatic overdraft loan agreement describes: • This program could still result in A courtesy overdraft/bounce protection account does not have sufficient funds to cover the overdraft. This describes: An automatic funds transfer agreement

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Vaughn Manufacturing assigns $7300000 of its accounts receivables as collateral for a $2.64 million 9% loan with a bank. Vaughn Manufacturing also pays a finance fee of 2% on the transaction upfront. What would be recorded as a gain (loss) on the transfer of receivables?