Which bank has the lowest effective interest rate

Reference no: EM13282091

In order to finance a shipment of badminton sets, Rujisawa Import-Export is seeking a $700,000 one-year bank loan. The Marine Bank requires that Rujisawa maintain a 25% compensating balance and requires four quarterly payments. The Lincoln Bank requires only a 15% compensating balance, but requires 12 monthly payments. In addition, Lincoln discounts the loan. Both banks state that their interest rate is 8%.

a) Which bank has the lowest effective interest rate? (NOTE: deduct the compensating balances from the principal in determining the effective rate) Please explain

b) If Lincoln Bank eliminated its compensating-balance requirement, would your answer change? Please explain.

Reference no: EM13282091

Questions Cloud

What is the specific heat of the substance : A 53.26 g sample of a substance is initially at 29.9 °C. After absorbing 2429 J of heat, what is the specific heat of the substance

Explain the mixture if the heat of acid-base neutralization : 100.0 mL of 1.020 M HCl and 50.0 mL of 2.040 M NaOH, each at 24.53ºC, are mixed in a Styrofoam cup calorimeter. What is the final temperature of the mixture if the heat of acid-base neutralization (?Hneut) = ?57 kJ per mole of H2O formed

What is min time before the memory chip provides valid data : The processorgenerates a signal for the memory output enable input att=22 ns and decode logic generates the signal for the chipenable input at t=18 ns. What is the minimum time beforethe memory chip provides valid data

Air quality-increased ventilation-natural daylighting : Write a brief description for each of the following categories of ondoor environment quality, including the environmental intent. Air quality. Increased ventilation. Natural daylighting

Which bank has the lowest effective interest rate : Which bank has the lowest effective interest rate? (NOTE: deduct the compensating balances from the principal in determining the effective rate) Please explain.

With what speed does the car then strike the tree : The driver of a car slams on the brakes when he sees a tree blocking the road. With what speed does the car then strike the tree

What data is stored in each memory location in the rom : You want to design a LUT toimplement an adder. The adder takes as input two 2-bit numbers. (a) What is the minimum size ROM that will be required. (b) What data is stored in each memory location in this ROM

Explain combusted in a constant-pressure bomb calorimeter : When 1.0 g of snack cake is combusted in a constant-pressure bomb calorimeter with a heat capacity (including its water) of 10.0 kJ/°C, the temperature of the calorimeter rises by 2.24°C. How many nutritional calories (Calories) are in one serving..

Differ between an athlete and a sedentary person : Discuss how energy needs differ between an athlete and a sedentary person. Are there differences in energy needs? Why or why not?

User Account

All Pages