What is effective rate of interest on compensating balance

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Reference no: EM131891756

1. If Analog computers can borrow at 9.8% for 3 years, what is the effective rate of interest on a $835,000 loan where a 16% compensating balance is required? (Use 360 days in a year. Round your answer to 2 decimal places.)

8.97%

11.67%

16.97%

14.42%

2. Price Corp. is considering selling to a group of new customers and creating new annual sales of $410,000. 4% will be uncollectible. The collection cost on these accounts is 6% of new sales, the cost of producing and selling is 78% of sales and the firm is in the 31% tax bracket. What is the profit on new sales?

$319,800

$29,966

$33,948

$43,948

Reference no: EM131891756

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