The Cattleman's Bank has offered the treasurer another deal, a line of credit up to $10 million with an annual interest rate of 10.5%. One covenant of the proposal is that Cattle Express must maintain a compensating balance equal to 10% of the amount of debt taken from the line of credit. Cattle Express will not have access to the compensating balance, nor earn any interest for the company. The tax rate is 40%. What is the effective cost of the line of credit? Submit %

Summit Record Company is negotiating with two banks for a $122,000 loan. Fidelity Bank requires a compensating balance of 20 percent, discounts the loan, and wants to be paid back in four quarterly payments. Southwest Bank requires a compensating balance of 10 percent, does not discount the loan, but wants to be paid back in 12 monthly installments. The stated rate for both banks is 9 percent. Compensating balances will be subtracted from the $122,000 in determining the available funds in part a. a-1. Calculate the effective interest rate for Fidelity Bank and Southwest Bank. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Fidelity Bank Southwest Bank a-2. Which loan should Summit accept? Southwest Bank O Fidelity Bank Effective Rate of Interest b. Recompute the effective cost of interest, assuming that Summit ordinarily maintains $24,400 at each bank in deposits that will serve as compensating balances. (Do not round intermediate…

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Alpesh bhaliya

On December 31, 2020, Sarasota Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Sarasota Co. agreed to accept a $337,600 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 11%. Sarasota is much more creditworthy and has various lines of credit at 5%. Click here to view factor table. (a) Your answer is partially correct. Prepare the journal entry to record the transaction of December 31, 2020, for the Sarasota Co. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 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.) Date Dec. 31, 2020 Account Titles and Explanation Notes Receivable Service Revenue Discount on Notes Receivable Debit…

Max Corp. sold goods for $36,000 on July 17, 2020, and accepted a 12%, 90-day note. On August 1, the note was sold to a bank at a 15% discount rate. Required: a. Compute the proceeds. Assume a 360-day year. b. If the maker dishonored the note at maturity, prepare the entry for Max Corp. assuming $75 of bank protest fees. If an amount box does not require an entry, leave it blank.

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

Shawn Bixby borrowed $29,000 on a 120-day, 8% note. After 55 days, Shawn paid $3,200 on the note. On day 95, Shawn paid an additional $5,200. Use ordinary interest. a. Determine the total interest use the U.S. Rule. Note: Do not round intermediate calculations. Round your answer to the nearest cent. Total interest b. Determine the ending balance due use the U.S. Rule. Note: Do not round intermediate calculations. Round your answer to the nearest cent. Ending balance due

The Patel Company has several financial issues to solve. As the company’s Financial Analyst you have been asked to answer the following 2 questions:   Their bank will lend them $100,000 for 90 days at a cost of $1,200 interest. What is the company’s effective annual rate? A major supplier has granted credit terms of 1/10 N120. Assuming the company can borrow any amount of money at the rate you have calculated above (in part 1), should the company take the discount? (Your answer must be supported with a calculation of the cost of not taking the discount – using either simple or effective annual rate)

A building contractor gives a $15,000 promissory note to a plumber who has loaned him $15,000. The note is due in 9 months with interest at 8%. Three months after the note is signed, the plumber sells it to a bank. If the bank gets a 9% return on its investment, how much will the plumber receive? Will it be enough to pay a bill for $ 15,285? How much will the plumber receive?