What is the effective interest rate

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Wildhorse's Masonry management estimates that it takes the company 40 days on average to pay its suppliers. Management also knows that the company has days' sales in inventory of 55 days and days' sales outstanding of 30 days. How does Wildhorse's cash conversion cycle compare with the industry average of 51 days?

Sheridan, Inc., has just set up a formal line of credit of $10 million with First Community Commercial Bank. The line of credit is good for up to five years. The bank will charge Sheridan an interest rate of 6.30 percent on any amount borrowed, and the firm will pay an annual fee of 64 basis points on the unused balance. The firm borrowed $8.0 million on the first day the credit line became available. What is the effective interest rate on this line of credit? (Round answer to 2 decimal places, e.g. 12.25%.)

Reference no: EM132970246

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