Description
1.
Problem
81 Cash discount [LO1]
Compute the cost of not taking the

(a)

3/14, net 55. (Use 360 days in a year. Round your intermediate

Cost of lost discount

%

(b)

2/18, net 55. (Use 360 days in a year. Round your intermediate

Cost of lost discount

%

(c)

3/19, net 55. (Use 360 days in a year. Round your intermediate

Cost of lost discount

%

(d)

4/15, net 150. (Use 360 days in a year. Round your intermediate

Cost of lost discount

%

2.Problem 82 Cash discount decision [LO1]
Regis Clothiers can borrow from

(a)

Compute the cost of not taking the

Cost of

(b)

Should the firm borrow the funds?




3.Problem 85 Effective rate of interest [LO2]
A pawn shop will lend $111 for 11

What is the effective rate of

Effective rate


4.Problem 87 Effective rate on discounted loan
[LO2]
Mary Ott is going to borrow $9,800

What is the effective rate of

Effective rate on

5.Problem 88 Prime vs. LIBOR [LO2]
Dr. Ruth is going to borrow $1,800

Which loan has the lower effective


6.Problem 89 Foreign borrowing [LO2]
Gulliver Travel Agencies thinks


What is the effective interest

Effective interest

%

7.Problem 810 Dollar cost of a loan [LO2]
Talmud Book Company borrows $19,900

What is the dollar cost of the

Cost of loan

$

8.Problem 811 Net credit position [LO1]
McGriff Dog Food Company normally

(a)

What is its net credit

Net credit position

$

(b1)

If the firm extends its average

Net credit position

$

(b2)

Has it improved its cash flow?



9.Problem 813 Compensating balances [LO2]
Computer

(a)

With a compensating balance

Amount to be borrowed

$

(b)

Given your answer to part a and

Effective rate


10.Problem 814 Compensating balances and
installment loans [LO2]
The Dade Company is borrowing

(a)

What is the effective rate of

Effective rate

%

(b)

What would be the effective rate

Effective rate

%

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