You are the accounting manager for Kool Ragz, Inc., a manufacturer of men's and women's clothing. The company needs to borrow $1,300,000 for 90 days in order to purchase a large quantity of material at "closeout" prices. The interest rate for such loans at your bank, Rimrock Bank, is 13% using ordinary interest. (a) What is the amount (in $) of interest on this loan? 2$ (b) After making a few "shopping" calls, you find that Southside National Bank will lend at 13% using exact interest. What is the amount (in $) of interest on this offer? (Round your answer to two decimal places.) $ (c) So that it can keep your business, Rimrock Bank has offered a loan at 12.5% using ordinary interest. What is the amount (in $) of interest on this offer?

You are the accounting manager for Kool Ragz, Inc., a manufacturer of men's and women's clothing. The company needs to borrow $1,300,000 for 90 days in order to purchase a large quantity of material at "closeout" prices. The interest rate for such loans at your bank, Rimrock Bank, is 13% using ordinary interest. (a) What is the amount (in $) of interest on this loan? 2$ (b) After making a few "shopping" calls, you find that Southside National Bank will lend at 13% using exact interest. What is the amount (in $) of interest on this offer? (Round your answer to two decimal places.) $ (c) So that it can keep your business, Rimrock Bank has offered a loan at 12.5% using ordinary interest. What is the amount (in $) of interest on this offer?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You are the accounting manager for Kool Ragz, Inc., a manufacturer of men's and women's clothing. The company needs to borrow $1,100,000 for 90 days in order to purchase a large quantity of material at "closeout" prices. The interest rate for such loans at your bank, Rimrock Bank, is 15% using ordinary interest. What is the amount (in $) of interest on this loan? After making a few "shopping" calls, you find that Southside National Bank will lend at 15% using exact interest. What is the amount (in $) of interest on this offer So that it can keep your business, Rimrock Bank has offered a loan at 14.5% using ordinary interest. What is the amount (in $) of interest on this offer? (Challenge) If Southside National wants to compete with Rimrock's last offer (part c) by charging $1,875 less interest, what rate (as a %), rounded to the nearest hundredths of a percent, must it quote using exact interest?
Assume that your team is in business and you must borrow $6,000 cash for short-term needs. You have been shopping banks for a loan, and you have the following two options. A. Sign a $6,000, 90-day, 10% interest-bearing note dated June 1. B. Sign a $6,000, 120-day, 8% interest-bearing note dated June 1. Required 1. Discuss these two options and determine the better choice. Ensure that all teammates concur with the decision and understand the rationale. 2. Each member of the team is to prepare one of the following journal entries. a. Option A—at date of issuance. b. Option B—at date of issuance. c. Option A—at maturity date. d. Option B—at maturity date. 3. In rotation, each member is to explain to the team the entry he or she prepared in part 2. Ensure that all team members concur with and understand the entries. 4. Assume that the funds are borrowed on December 1 (instead of June 1) and your business operates on a calendar-year reporting period. Each member of the team is to prepare…
u are the accounting manager for Kool Ragz, Inc., a manufacturer of men's and women's clothing. The company needs to borrow $1,720,000 for 80 days in order to purchase a large quantity of material at "close ces. The interest rate for such loans at your bank, Rimrock Bank, is 9% using ordinary interest. What is the amount of interest on this loan? Round your answer to the nearest cent. After making a few "shopping" calls, you find that Southside National Bank will lend at 9% using exact interest. What is the amount of interest on this offer? Round your answer to the nearest cent. So that you can keep your business, Rimrock Bank has offered a loan at 8.3% using ordinary interest. What is the amount of interest on this offer? Round your answer to the nearest cent. (Challenge) If Southside National wants to beat Rimrock's last offer (part c) by charging $1,100 less interest, what rate, rounded to the nearest hundredths of a percent, must it quote using exact interest? not enter the percent…
You are the loan department supervisor for a bank. This installment loan is being paid off early, and it is your task to calculate the rebate fraction, the finance charge rebate (in $), and the payoff for the loan (in $). (Round dollars to the nearest cent.) if the amount financed is = 1,900 number of payments are = 18 the monthly payment is = 125.89 payments made are = 13 slove for rebate fraction, finance charge rebate and the loan payoff
Van Buren Resources Inc. is considering borrowing $100,000 for 182 days from its bank. Van Buren will pay $6,000 of interest at maturity, and it will repay the $100,000 of principal at maturity. a. Calculate the loan’s annual financing cost. b. Calculate the loan’s annual percentage rate. c. What is the reason for the difference in your answers to Parts a and b?
The Patel Company has several financial issues to solve. As the company’s Financial Analyst you have been asked to answer the following 2 questions: Their bank will lend them $100,000 for 90 days at a cost of $1,200 interest. What is the company’s effective annual rate? A major supplier has granted credit terms of 1/10 N120. Assuming the company can borrow any amount of money at the rate you have calculated above (in part 1), should the company take the discount? (Your answer must be supported with a calculation of the cost of not taking the discount – using either simple or effective annual rate)
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