Questions from Financial Management

Q: Mo and Chris’s Sporting Goods, Inc., borrows $14,

Mo and Chris’s Sporting Goods, Inc., borrows $14,500 for 20 days at 12 percent interest. What is the dollar cost of the loan?

Q: Sampson Orange Juice Company normally takes 20 days to pay for its

Sampson Orange Juice Company normally takes 20 days to pay for its average daily credit purchases of $6,000. Its average daily sales are $7,000, and it collects accounts in 28 days. a. What is its net...

Q: Maxim Air Filters, Inc., plans to borrow $300,

Maxim Air Filters, Inc., plans to borrow $300,000 for one year. Northeast National Bank will lend the money at 10 percent interest and requires a compensating balance of 20 percent. What is the effect...

Q: Digital Access, Inc., needs $400,000 in funds

Digital Access, Inc., needs $400,000 in funds for a project. a. With a compensating balance requirement of 20 percent, how much will the firm need to borrow? b. Given your answer to part a and a state...

Q: Carey Company is borrowing $200,000 for one year at

Carey Company is borrowing $200,000 for one year at 12 percent from Second Intrastate Bank. The bank requires a 20 percent compensating balance. What is the effective rate of interest? What would the...

Q: Capone Child Care Centers, Inc., plans to borrow $250

Capone Child Care Centers, Inc., plans to borrow $250,000 for one year at 10 percent from the Chicago Bank and Trust Company. There is a 20 percent compensating balance requirement. Capone keeps minim...

Q: The treasurer of Neiman Supermarkets is seeking a $30,000

The treasurer of Neiman Supermarkets is seeking a $30,000 loan for 180 days from Wrigley Bank and Trust. The stated interest rate is 10 percent and there is a 15 percent compensating balance requireme...

Q: Tucker Drilling Corp. plans to borrow $200,000.

Tucker Drilling Corp. plans to borrow $200,000. Northern National Bank will lend the money at one-half percentage point over the prime rate of 8½ percent (9 percent total) and requires a compensating...

Q: Sprint Shoes, Inc., had a beginning inventory of 9,

Sprint Shoes, Inc., had a beginning inventory of 9,000 units on January 1, 2010. The costs associated with the inventory were: During 2010, the firm produced 42,500 units with the following costs: S...

Q: Your company plans to borrow $5 million for 12 months,

Your company plans to borrow $5 million for 12 months, and your banker gives you a stated rate of 14 percent interest. You would like to know the effective rate of interest for the following types of...