National Co. needs to borrow P300,000 for the next 6 months. The company has a line of credit with a bank that allows the company to borrow funds with a 10% interest rate subject to a 20% of loan compensating balance. Currently, National Co. has no funds on deposit with the bank and will need the loan to cover the compensating balance as well as their other financing needs. How much will National Co. need to borrow?
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National Co. needs to borrow P300,000 for the next 6 months. The company has a line of credit with a bank that allows the company to borrow funds with a 10% interest rate subject to a 20% of loan compensating balance. Currently, National Co. has no funds on deposit with the bank and will need the loan to cover the compensating balance as well as their other financing needs. How much will National Co. need to borrow?
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- NTA Co. needs to borrow P300,000 for the next 6 months. The company has a line of credit with a bank that allows the company to borrow funds with a 10% interest rate subject to a 20% of loan compensating balance. Currently, NTA Co. has no funds on deposit with the bank and will need the loan to cover the compensating balance as well as their other financing needs. How much will NTA Co. need to borrow?Tokyo Corporation must pay one of its suppliers P765,000. The bank requires a 15 percent compensating balance on loans to businesses. Due to the absence of funds at the lending bank, Tokyo Corporation must borrow enough to have P765,000.00 available to pay its suppliers after covering the compensating balance. How much must Splash Corporation borrow in order to pay its suppliers P765,000? In your calculations, assume that a year has 360 days. a. P900,000 b. P5,100,000 c. P573,750 d. P765,000 e. P879,750Hendo Corp. can borrow from its bank using a one year (a) simple interest loan with an 11.3% quoted rate and no compensating balance or (b) a discount interest loan with a quoted rate equal to 9.9% that requires a 15% compensating balance. What is the EAR of the lower cost loan? Hendo Corp. normally tries to keep its checking account balance close to $0.
- Suppose that you owe $2,000 on a credit card that charges 18% APR and you pay either the minimum 10% or $20, whichever is higher, every month. How long will it take you to eliminate the debt? Assume that the bank uses the previous-balance method to calculate your interest, meaning that the bank does not subtract the amount of your payment from the beginning balance but charges you interest on the previous balance.Yoo, Incorporated, has arranged a line of credit that allows it to borrow up to $42 million at any time. The interest rate is 618 percent per month. Additionally, the company must deposit 4 percent of the amount borrowed in a noninterest bearing account. The bank uses compound interest on its line-of-credit loans. If the company needs $18 million for 7 months, how much will it pay in interest? Multiple Choice $925.47741 $793.266.35 $918,132.35 $826,319.11 $1,057,688.46Yoo, Incorporated, has arranged a line of credit that allows it to borrow up to $51 million at any time. The interest rate is 627 percent per month. Additionally, the company must deposit 5 percent of the amount borrowed in a noninterest-bearing account. The bank uses compound interest on its line-of-credit loans. If the company needs $27 million for 8 months, how much will it pay in interest? Multiple Choice $1.307,50417 $1,457,29019 $1619,200.22 $1.230.592.16) $1,384,41618
- The Blake Company has an outstanding bank loan of P400,000 at an interest rate of 12%. The company is required to maintain a 20% compensating balance in its checking account. What is the effective interest cost of the loan? Assume that the company would not normally maintain this average amount? Format: 11%Van Buren Resources Inc. is considering borrowing $100,000 for 182 days from its bank. Van Buren will pay $6,000 of interest at maturity, and it will repay the $100,000 of principal at maturity. a. Calculate the loan’s annual financing cost. b. Calculate the loan’s annual percentage rate. c. What is the reason for the difference in your answers to Parts a and b?A commercial bank is planning to offer Luna a loan in the amount of $15,000 and the bank figures that Luna will repay the loan in full with probability 0.79 and default otherwise. Also, Luna has asked for an interest rate of 12%. In order for the bank to be able to offer this rate, what is the collateral amount that Luna must offer the bank in the event of default? $8,177.5 $8,228.6 $8,366.9 $8,401.1
- Pedro Gil Company must maintain a compensating balance of P50,000 in its checking account as one of the conditions of its short-term 6% bank loan of P500,000. Pedro Gil’s checking account earns 2% interest. Ordinarily, Pedro Gil would maintain a P20,000 balance in the account for transaction purposes. What is the loan’s approximate effective interest rate? Please show your solution.Wrexham Corp. (WC) purchases computer parts from its suppliers 1/15, net 30. However, to take advantage of the discount WC needs to get a bank loan. The bank charges 8% interest (APR) and a one percent origination fee for the loan (assume the loan is for 1 year and is renewed yearly). What is the effective annual cost of not taking the trade discount? What is the effective cost of the bank loan? Should WC take out the bank loan to take advantage of the trade credit?A bank is offering a loan of $20,000 with an interest rate of 9%, payable with monthly payments over a 4-year period. a. Calculate the monthly payment required to repay the loan. b. This bank also charges a loan fee of 4% of the amount of the loan, payable at the time of the closing of the loan (that is, at the time the borrower receives the money). What effective interest rate is the bank charging?