One coffee shop business in TX borrowed $3,000 and was scheduled to pay back $3,330 by paying 11% of its credit card receipts each day until $3,400 paid in full. Average sales were $2,000, so business paid Square $220 per day (2kx11%). It took business 16 days to pay back the loan. Was effective interest rate charged equal to 11% (or bigger/smaller)? O Yes O No

One coffee shop business in TX borrowed $3,000 and was scheduled to pay back $3,330 by paying 11% of its credit card receipts each day until $3,400 paid in full. Average sales were $2,000, so business paid Square $220 per day (2kx11%). It took business 16 days to pay back the loan. Was effective interest rate charged equal to 11% (or bigger/smaller)? O Yes O No

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Bird's Eye Treehouses, Incorporated, a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 1.5 days. Assume 365 days a year. Average number of payments per day Average value of payment Variable lockbox fee (per transaction) Annual interest rate on money market securities 880 $830 $.10 3.2% a. What is the NPV of the new lockbox system? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose in addition to the variable charge that there is an annual fixed charge of $3,000 to be paid at the end of each year. What is the NPV now? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely…
The Mutt Hut Pet Shop borrowed $59,000 on March 1 for 132 days. The rate was 11% using the ordinary interest method. On day 30 of the loan, The Mutt Hut made a partial payment of $18,000, and on day 59 of the loan, The Mutt Hut made a second partial payment of $10,500. a. What is the new maturity value of the loan? Round your answer to the nearest cent. Do not round intermediate calculations. $
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Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime rate plus 4%. The starting balance on October 1 was $9,300. On October 4 they made a payment of $1,800. On October 13 the business borrowed $2,500, and on October 19 they borrowed $4,200. If the current prime rate is 8%, what is the new balance (in $)?
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Your office supply has a line of credit that charges an annual percentage rate of prime rate plus 3%. Their starting balance on March 1st was $10,600. On March 5th they borrowed $7,500. On March 14th the business made a payment of $3,300 and in March 18th they borrowed $5,300. If the current prime rate is 9% what is the new balance? $26,100.00 $20,276.10 $27,583.43 $18,400.29
Lush Gardens Co. bought a new truck for $52,000. It paid $5,720 of this amount as a down payment and financed the balance at 4.08% compounded semi-annually. If the company makes payments of $1,700 at the end of every month, how long will it take to settle the loan? a. How many deposits will the company have to make to settle the loan? Round up to the next whole number b. How long will it take to settle the loan? years months E Express the answer in years and months, rounded to the next payment period
Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime rate plus 4%. The starting balance on October 1 was $9,100. On October 4 they made a payment of $1,400. On October 13 the business borrowed $2,100, and on October 19 they borrowed $4,800. If the current prime rate is 8%, what is the new balance (in $)? (Round your answer to the nearest cent.)
ABC Corporation receives checks from its customers. The total check value averages 700,000 each day. It takes an average of 5 days from deposits for these to clear the bank. If the bank offers to accelerate the 5-day clearing process to 3 days for a monthly fee of 600. If ABC can earn 4% investment income from excess cash, how much is the net annual benefits/cost of this bank offer?
Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime rate plus 4%. The starting balance on October 1 was $9,500. On October 4 they made a payment of $1,400. On October 13 the business borrowed $2,500, and on October 19 they borrowed $4,400. If the current prime rate is 6%, what is the new balance (in $)? (Round your answer to the nearest cent.) ta
A company can issue a 45-day $10 million commercial paper at a rate of 4.50%. It can reduce the rate to 4.35% if it is backed by a standby letter of credit (SBLC). A bank is willing to issue the SBLC for a fee of 10 basis points. The following is true: A The fee for issuing the SBLC is $10,000 B The net savings to the issuer is $1,250 C The amount received by the issuer for the commercial paper without an SBLC is $9,945,625. D The difference in the amount received by the issuer with and without the SBLC is $1,875.
Mr. Rich Mann, is the credit manager of MCC Inc. Mr. Mann would like to estimate the cost of credit sales. From experience, credit customers have paid their bills in an average of 40 days and a standard deviation of 12 days. Customers who pay their bills in 10 days receive a 2% discount. Accounts that are not paid within 75 days are written off as bad debts. (Assume a normal distribution) a. What percentage of accounts is within 25 and 60 days old? b. What percentage of the accounts is written off as bad debts or receives the discount For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS E E A v 、工%ロ启 Q Paragraph Arial 10pt ...

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