What is the effective annual rate of the loan

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1.A company presently receives an average of $10,000 in cheques per day from its customers. It presently takes the company an average of five days to receive and deposit these cheques. It is considering a lockbox arrangement that would reduce its collection float time by 3 days, and cost it $50 per month. If its opportunity cost of funds tied up in float is 8 percent, should it adopt the new system?

2.A firm engaged a one-year monthly pay $100,000 line of credit at 7.5 percent plus a 0.5 percent commitment fee on the unused portion of the line. The firm used 60 percent of the line for the first half year and reduced the loan amount to 30 percent for the rest of the year. What is the effective annual rate of the loan?

Reference no: EM13507191

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