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What is the company effective annual rate

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Question - The Holt Company has several financial issues to solve. As the company's Financial Analyst you have been asked to answer the following 2 questions:

1. Their bank will lend them $100,000 for 60 days at a cost of $950 interest. What is the company's effective annual rate?

2. A major supplier has granted credit terms of 2/10 N120. Assuming the company can borrow any amount of money at the rate you have calculated above (in part 1), should the company take the discount?

Reference no: EM133171521

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