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Determine the effect of conditions on the annual financing

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Reference no: EM131119904

Determine the effect of each of the following conditions on the annual financing cost for a line of credit arrangement (assuming that all other factors remain constant):

a. The bank raises the prime rate.

b. The bank lowers its compensating balance requirements.

c. The firm’s average bank balance increases as the result of its instituting more stringent credit and collection policies.

Reference no: EM131119904

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