Answered: You are the accounting manager for Kool…

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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You are the accounting manager for Kool Ragz, Inc., a manufacturer of men's and women's clothing. The company needs to borrow $1,700,000 for 90 days in order to purchase a large quantity of material at "closeout" prices. The interest rate for such loans at your bank, Rimrock Bank, is 13% using ordinary interest.

(a)

What is the amount (in $) of interest on this loan?

(b)

After making a few "shopping" calls, you find that Southside National Bank will lend at 13% using exact interest. What is the amount (in $) of interest on this offer? (Round your answer to two decimal places.)

(c)

So that it can keep your business, Rimrock Bank has offered a loan at 12.5% using ordinary interest. What is the amount (in $) of interest on this offer?

(d)

If Southside National wants to compete with Rimrock's last offer (part c) by charging $1,125 less interest, what rate (as a %), rounded to the nearest hundredths of a percent, must it quote using exact interest?

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