Reference no: EM13323636

Question

1)The ABC Company paid total interest of $2,000 on its line of credit borrowings for the year. ABC paid a $100 commitment fee on an average borrowing of $20,000 for the year. What is ABC's annual effective rate of interest?

9.95%

10.00%

10.50%

12.71%

2) MNO, Inc. paid a total interest of $3,000 on its line of credit borrowings for the year. MNO's average annual borrowings are $30,000. The bank retains $6,000 as a compensating balance. What is the MNO's annual effective rate of interest?

8.33%

10.00%

12.50%

30.00%

3) Borque Manufacturing forecasts that its production will require 500,000 tons of bauxite over its planning period. Demand for Torque's products is stable over time. Ordering costs amount to an average of $20.00 per order. Holding costs are estimated at $1.25per ton of bauxite. EOQ for Torque is

2,200 tons

6,000,000 tons

4,000 tons

5.6tons

4)The Brooks Company paid total interest of $3,000 on its line of credit borrowings for the year. Also, Brooks paid a $50 commitment fee and borrowed on average $30,000 for the year. Of the $30,000 average borrowings, $6,000 remained in the bank as a compensating alance. What is the Brook's annual effective rate of interest?

10.17%

11.26%

12.50%

12.71%

13.22%