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What is the cost of the trade credit it provides

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Q1. Breakfast Inn Corp. has a formal line of credit of USD500,000 with Global Universal Bank. The interest rate on this loan is 6%, and under the agreement, Breakfast Inn must pay an annual fee of 75 basis points on the unused amount. The amount currently outstanding on the loan is USD325,000. What is the annual fee the company must pay on the current unused balance? What is the effective interest rate?

Q2. Established in 1999, PT Himawari Sun sells its household products with terms of 3/15 EOM, net 30, to its customers. What is the cost of the trade credit it provides to its customers?

Reference no: EM133113779

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