True regarding pledged receivables

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Reference no: EM132018381

1. Suppose that you are able to generate an annual depreciation deduction of $34,000 that would otherwise have been taxed at 00% rate each year for five years. Determine the present value of the annual tax savings using a 7.5% discount rate.

A) $41,268 B) $137,560 C) $26,683 D) None of the above

2. Which of the following is true regarding pledged receivables?

a. They are collateral for a loan.

b. Uncollected accounts are usually the responsibility of the lender.

c. The process involves factoring.

d. Both a & b

3. What is the effective rate on an 8% loan subject to a 20% minimum compensating balance? Show your work please

a. 9.6%

b. 10%

c. 8.13%

d. none of the above

Reference no: EM132018381

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