Bank loan to take cash discount neveready flashlights inc

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Bank loan to take cash discount Neveready Flashlights, Inc., needs $300,000 to take a cash discount of 2/10, net 70. A banker will loan the money for 60 in percentage terms if the firm did not take the cash discount, but paid the bill in 70 days instead of 10 days? Should the firm borrow the money to take the discount? If the banker requires a 20 percent compensating balance, how much must the firm borrow to end up with the $300,000? would be the effective interest rate in part d if the interest charge for 60 days were $6,850? Should the firm borrow with the 20 percent compensating balance?

Reference no: EM13480978

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