YOU MUST SHOW YOUR WORK TO EARN POINTS Suppose that you have…
YOU MUST SHOW YOUR WORK TO EARN POINTS Suppose that you have access to a credit line in the amount of $500,000. The interest rate on the credit line is 5.75%, the commitment fee is 0.35% on the unused portion of the line, average daily borrowing is estimated to be $200,000. (No compensating balance required). a. Find the effective cost of the credit line. b. if the compensating balance = 10%, find the effective cost of this credit line
Read DetailsYOU MUST SHOW YOUR WORK TO EARN POINTS Your company just bou…
YOU MUST SHOW YOUR WORK TO EARN POINTS Your company just bought $85,000 in goods from your supplier on trade credit terms 1/10 net 60. Your opportunity cost of funds is 12%. On which terms should you pay? Calculate the NPV. If your supplier is now offering a 4% discount if the payment occurs on delivery. Otherwise, you receive net 45 days. What should you do under these terms?
Read Details