Simple Simon's Bakery purchases supplies on terms of 1.7/10, net 25. If Simple Simon's chooses to take the discount offered, it must obtain a bank loan to meet its short-term financing needs. Alocal bank has quoted Simple Simon's owner an interest rate of 10.2% on borrowed funds. Should Simple Simon's enter the loan agreement with the bank and begin taking the discount? (Hint: Use365 days for a year.)The cost of forgoing the discount is %. (Round to one decimal place.)Should Simple Simon's enter the loan agreement with the bank and begin taking the discount? (Select the best choice below.)A. Simple Simon's should enter into the loan agreement with the bank and begin taking the discount.B. Simple Simon's should not enter into the loan agreement but should begin taking the discount.C. Simple Simon's should enter into the loan agreement but not begin taking the discount.D. Need more information to answer the question.

The discount rate refers to the interest rate used to calculate the present value of the future…

Answered: Simple Simon's Bakery purchases…

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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Similar questions

A restaurant borrows $12,800 from a local bank for 5 months. The local bank charges simple interest at an annual rate of 1 7.3% for this loan. Assume each month is of a year. Answer each part below. 12 Do not round any intermediate computations, and round your final answers to the nearest cent. If necessary, refer to the list of financial formulas. (a) Find the interest that will be owed after 5 months. $ (b) Assuming the restaurant doesn't make any payments, find the amount owed after 5 months.
Ricky Ripov’s Pawn Shop charges an interest rate of 18.25 percent per month on loans to its customers. Like all lenders, Ricky must report an APR to consumers. a. What rate should the shop report? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the effective annual rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Yoo, Incorporated, has arranged a line of credit that allows it to borrow up to $51 million at any time. The interest rate is 627 percent per month. Additionally, the company must deposit 5 percent of the amount borrowed in a noninterest-bearing account. The bank uses compound interest on its line-of-credit loans. If the company needs $27 million for 8 months, how much will it pay in interest? Multiple Choice $1.307,50417 $1,457,29019 $1619,200.22 $1.230.592.16) $1,384,41618
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Simple Simon's Bakery purchases supplies on terms of 1.1/10, net 25. If Simple Simon's chooses to take the discount offered, it must obtain a bank loan to meet its short-term financing needs. A local bank has quoted Simple Simon's owner an interest rate of 10.6% on borrowed funds. Should Simple Simon's enter the loan agreement with the bank and begin taking the discount? (Hint: Use 365 days for a year.) The cost of forgoing the discount is %. (Round to one decimal place.) Should Simple Simon's enter the loan agreement with the bank and begin taking the discount? (Select the best choice below.) A. Simple Simon's should enter into the loan agreement but not begin taking the discount. B. Need more information to answer the question. OC. Simple Simon's should enter into the loan agreement with the bank and begin taking the discount. D. Simple Simon's should not enter into the loan agreement but should begin taking the discount.
Pool-N-Patio World needs to borrow $50,000 to increase its inventory for the upcoming summer season. The owner is confident that he will sell most, if not all, of the new inventory during the summer, so he wishes to borrow the money for only four months. His bank has offered him a simple interest amortized loan at 73% interest. (Round your answers to the nearest 4 cent.) (a) Find the size of the monthly bank payment. Interest Portion Total Payment Balance Due (b) Prepare an amortization schedule for all four months of the loan. Principal Portion A A A Payment Number 0 1 2 3 4 A $ A LA +A $ A A A A A $ +A $ +A
Simple Simon’s Bakery purchases supplies on terms of 1/10, Net 25. If Simple Simon’s chooses to take the discount offered, it must obtain a bank loan to meet its short-term financing needs. A local bank has quoted Simple Simon’s owner an interest rate of 12% on borrowed funds and no origination fees. Should Simple Simon’s enter the loan agreement with the bank in order to begin taking the discount?
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