a) issue a commercial paper at 13%p.a less 22% service charge   b) discount a 180-day note for 14%   c) avail a bank loan at 12% p.a with a 20% required co

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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in anticipation of an increase in sales manila care needs to increase working capital for receivables and inventory by 740,000. The following alternatives are available:

a) issue a commercial paper at 13%p.a less 22% service charge
 
b) discount a 180-day note for 14%
 
c) avail a bank loan at 12% p.a with a 20% required compensating balance.
 
d) daily credit payment to supplier's term of 2/10, n/45
 
What is the annual effective cost for each?

 

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