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What is the nominal interest rate on the loan

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Reference no: EM132905666

The first task concerns the cash conversion cycle. Your boss has asked that you examine the following data:

Inventory conversion period is 60 days
Payables deferral period is 30 days
Payables deferral period is 30 days

The second task concerns the cost of bank loans under differing conditions. Specifically:

  1. The company needs $1,500,000 for a new project.
  2. The loan will cost 10% simple interest, for 4 months, with a 20% compensating balance.

Problem 1: What is the nominal interest rate on the loan?

Reference no: EM132905666

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