Reference no: EM133140930

Question - You are the accounting manager for Kool Ragz, Inc., a manufacturer of men's and women's clothing. The company needs to borrow $1,100,000 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 14% using ordinary interest.

Required -

(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 14% using exact interest. What is the amount (in $) of interest on this offer?

(c) So that it can keep your business, Rimrock Bank has offered a loan at 13.5% using ordinary interest. What is the amount (in $) of interest on this offer?

(d) (Challenge) 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?