Question

Helps Burt's Department Store needs $644,000 to take a cash discount of 2.50/20, net 95. A banker will loan the money for 75 days at an interest cost of $16,100. a. What is the annual rate on the bank loan? (Use 365 days in a year. Do not round Intermediate calculations. Round the final answer to 2 decimal places.) Annual rate ok b. How much would it cost (in percentage terms) if Burt's did not take the cash discount and paid the bill in 95 days instead of 20 days? (Use 365 days in a year. Do not round intermediate calculations. Round the final answer to 2 decimal places.) ences Cost of not taking a cash discount c. Should Burt's borrow the money to take the discount? No Yes d. If the banker requires a 10 percent compensating balance, how much must Burt's borrow to end up with the $644,000? (Round the final answer to the nearest whole dollar.) Amount to be borrowed $ e-1. What would be the interest rate in part of the interest charge for 75 days were $24.500? (Use 365 days in a year. Do not round intermediate calculations. Round the final answer to 2 decimal places.) Annual rate %

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE