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# Harper Engine Company needs \$602000 to take a cash discount of 25010 net 110 A banker will loan the money for 100 days at an interest cost of \$14600 a What is the effective rate on the bank

Harper Engine Company needs \$602,000 to take a cash discount of 2.50/10, net 110. A banker will loan the money for 100 days at an interest cost of \$14,600.

 a. What is the effective rate on the bank loan? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

 Effective rate of interest %

 b. How much would it cost (in percentage terms) if Harper did not take the cash discount but paid the bill in 110 days instead of 10 days? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

 Cost of not taking a cash discount %

c. Should Harper borrow the money to take the discount?

 Yes No

 d. If another banker requires a 10 percent compensating balance, how much must Harper borrow to end up with \$602,000? (Round your answer to 2 decimal places.)

 Amount to be borrowed \$

 e-1. What would be the effective interest rate in part d if the interest charge for 100 days were \$12,600? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

 Effective rate of interest %

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Apr 04 2020 View more View Less