Logo
Home Study Material Contact Search
AI Chat FREE
  1. mathematics
  2. advance math
  3. ?(cost of? short-term bank loan?) on july? 1, 2015

?(Cost of? short-term bank loan?) On July? 1, 2015, the Southwest Forging Corporation arranged for a...

70.2K

Verified Solution

Question

Advance Math

?(Cost of? short-term bank loan?) On July? 1, 2015, theSouthwest Forging Corporation arranged for a line of credit withthe First National Bank? (FNB) of Dallas. The terms of theagreement call for a $140,000 maximum loan with interest set at 1percent over prime. In? addition, the firm has to maintain a 19percent compensating balance in its demand deposit accountthroughout the year. The prime rate is currently 14 percent. Note?:Interest is not paid in advance? (discounted).

a. If Southwest normally maintains a $26,600 to $40,600 balancein its checking account with FNB of? Dallas, what is the effectivecost of credit under the? line-of-credit agreement when the maximumloan amount is used for a full? year?

b. Compute the effective cost of credit if the firm borrows thecompensating balance and the maximum possible amount under the loanagreement.? Again, assume the full amount of the loan isoutstanding for a whole year.

Answer & Explanation Solved by verified expert
4.1 Ratings (831 Votes)
    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Slot machines are the favorite game at casinos throughout the United States (Harrah’s Survey 2002: Profile...

Statistics
Q

Arthropods represent the cumulation of evolutionary development in the protostomes. identify at least three characteristics that contribute...

Biology
Q

workout for a 21 year old volleyball player for muscular strength

Medical Sciences
Q

A trainer suggests the following nutrition for their athlete surrounding their training: In the hour before training:...

Medical Sciences
Q

Solar energy is an alternative to fossil fuels for providing electrical power for both homes and...

Physics
Q

Explain the steps in the posting process. Also, discuss what a Trial balance is and why...

Accounting
Q

TESTED PHONIC LAINS FARM RELIEF BILL MAN Based on this political cartoon the artist is...

Biology
Q

Determine whether the relation is a function.y = -3Complete the table of values for the...

Basic Math
Q

An experiment is pulling a ball from an urn that contains 8 blue balls and...

Statistics
Q

If T is defined by T x Ax find a vector x whose image under...

Algebra
Q

Moped, Inc. purchased machinery at a cost of $44,000 on January 1, 2017. The expected...

Accounting
Q

P12-2 Analyzing Comparative Financial Statements by Using Percentages and Selected Ratlos LO12-5, 126,129 The comparative...

Accounting