Wednesday
July 23, 2014

Homework Help: Finance

Posted by Kimmie on Saturday, October 15, 2011 at 7:53pm.

Can anyone explain to me how to use this formula?
Cost of failing to
take a cash discount
Disc

ount percent
100 percent Discount percent
3


60
Final due date  Discount period
I am trying to calculate Assume the proceeds from the loan with the compensating balance requirement will be used to take cash discounts. Disregard part b about installment payments. and us the loan costs from part a. If the terms of the cash discount are 2/10, net 60, should the firm borrow the funds to take the discount? I cannot understand how I am supposed to do this. The figures I am using come from the following:

The Watson Corporation is negotiating a loan from PNC Bank. The company needs to borrow $300,000.

The bank offers a rate of 7% with a 30% compensating balance requirement, or as an alternative, 10% with additional fees of $4,700 to cover the services the bank is providing. In either case, the rate on the loan is floating (changes as the prime interest rate changes), and the loan would be for one year

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

finance - compute the present value of a $100 cash flow for the following ...
Financial Analysis - Compute the present value of a $100 cash flow for the ...
Math - With the stars (*) next 2 the #'s are my answers! ! ! 1) Find the percent...
Finance/Math - 1. Present Values. Compute the present value of a $100 cash flow ...
math - A bond has an average return of 6.8 percent and a standard deviation of 4...
Finance - 1. Present Values. Compute the present value of a $100 cash flow for ...
Finance - Investment X offers to pay you $5,500 per year for nine years, whereas...
Math for Ms. Sue Or Steve - Use an equation to solve the problem. 1. What is 57...
finance - Assume the proceeds from the loan with the compensating balance ...
math - during a special promotion, each customer who makes a purchase is given a...

Search
Members