2. Mala-Inse Company needs P5,000,000 short-term credit for 90 days. To produce the amount, the company intends to sell commercial paper with a discount rate of 15%, issuance cost of P75,000 and other flotation cost of P15,000. Determine the simple cost of financing? (round to 4 decimal places)
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- Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual interest rate of 6%, and payable in four months. How much interest will Marathon Peanuts owe at the end of four months? A. $2,600 B. $7,800 C. $137,800 D. $132,6002. Mala-Inse Company needs ₱5,000,000 short-term credit for 90 days. To produce the amount, the company intends to sell commercial paper with a discount rate of 15%, issuance cost of ₱75,000 and other flotation cost of ₱15,000. Determine the simple cost of financing? (round to 4 decimal places)Mahrouq Technologies buys $12,726,823 of materials (net of discounts) on terms of 1/30, net 60, and it currently pays within 30 days and takes discounts. Mahrouq plans to expand, and this will require additional financing. If Mahrouq decides to forego discounts and thus to obtain additional credit from its suppliers, calculate the nominal cost of that credit. Answer in % terms to 2 decimal places (no % sign).
- Uptown Bank has granted a line of credit of $80,000 with an interest rate of 7.5 percent and a compensating balance requirement of 2.5 percent to Jones Hardware. The compensating balance requirement is based on the total amount borrowed. What is the effective annual interest rate if the firm needs $55,000 for one year to finance its inventory? Group of answer choicesPercentages need to be entered in decimal format, for instance 3% would be entered as .03. Cooley Industries needs an additional $500,000, which it plans to obtain through a factoring arrangement. The factor would purchase Cooley's accounts receivables and advance the invoice amount, minus a 2% commission, on the invoices purchased each month. Cooley sells on terms of net 30 days. In addition, the factor charges a 12% annual interest rate on the total invoice amount, to be deducted in advance. (This information is shown on the spreadsheet provided.) What amount of accounts receivable must be factored to net $500,000? If Cooley can reduce credit expenses by $3,500 per month and avoid bad debt losses of 2.5% on the factored amount as shown on the spreadsheet, what is the total dollar cost per month of the factoring arrangement? What would be the total cost of the factoring arrangement if Cooley's funding needs rose to $750,000? Would the factoring arrangement be profitable under…Percentages need to be entered in decimal format, for instance 3% would be entered as .03.) Cooley Industries needs an additional $500,000, which it plans to obtain through a factoring arrangement. The factor would purchase Cooley's accounts receivables and advance the invoice amount, minus a 2% commission, on the invoices purchased each month. Cooley sells on terms of net 30 days. In addition, the factor charges a 12% annual interest rate on the total invoice amount, to be deducted in advance. (This information is shown on the spreadsheet provided.) Would it be to Cooley's advantage to offer to pay the factor a commission of 2.5% if it would lower the interest rate to 10.5% annually? Assume the firm needs $500,000. Explain your answer. Assume a commission of 2% and an interest rate of 12%. What would be the total cost of the factoring arrangement if Cooley's funding needs rose to $650,000? Would the factoring arrangement be profitable under these circumstances? Why or…
- A. DEF has total forecasted gross purchases of P4,500,000 relating to a major supplier for the coming year. The supplier is offering a credit term of 3/15, n/45. How much is the simple annual effective cost of paying on the 45th day? B. ABC can take a 45-day loan with a 15% interest deducted in advance, to be reapplied each time. How much is the simple annual cost of the loan? C. ABC’s bank offered a loan with conditions of a P5,000,000 face amount, 6-month term, 4% interest deducted in advance and bank charge of P30,000. How much is the compounded annual effective cost of the bank loan?Grecian Tile Manufacturing of Athens, Georgia, borrows $1,500,000 at six-month CME Term SOFR plus a Bank Credit premium of 0.51 percent and a lending margin of 1.20 percent per annum on a six-month rollover basis from a London bank. If six-month CME Term SOFR is 2.540 percent over the first six-month interval and 3.415 percent over the second six-month interval, how much will Grecian Tile pay in INTEREST over the first year of its Eurodollar loan?Lancaster Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 55, and it currently pays on the 5th day and takes discounts. Lancaster plans to expand, which will require additional financing. If Lancaster decides to forgo discounts, how much additional credit could it obtain, and what would be the nominal and effective cost of that credit? If the company could get the funds from a bank at a rate of 9%, interest paid monthly, based on a 365-day year, what would be the effective cost of the bank loan? Should Lancaster use bank debt or additional trade credit? Explain
- Mavericks Cosmetics buys $4,691,301 of product (net of discounts) on terms of 7/10, net 60, and it currently pays on the 10th day and takes discounts. Mavericks plans to expand, and this will require additional financing. If Mavericks decides to forego discounts, what would the effective percentage cost of its trade credit be, based on a 365-day year? Answer in % terms to 2 decimal places.Miracle Bhd requires RM500,000 ti finance its operations. The following short-termresources of financing are available: Alternative I A loan from OCS Bank with simple interest rate of 9 percent per annum for 3 months. A 20 percent compensating balance is required. Alternative II Issue commercial papers at a face value of RM5,000 per paper. The interest is 8 percent per annum for 270 days maturity period. The issuing cost is RM150 per paper. Alternative III A revolving line of credit of RM550,000 for a 1 percent commitment fee on the unused funds and an 8 percent interest rate. i) Calculate the effective interest rate for each alternative. ii) Justify the best alternative for Miracle Bhd.angel co. has P500,000 in receivable that carries a 30-day credit term, 2% factor’s fee, 5% holdback reserve, and an interest of 12% per annum on advances. Use 360 days. What is the effective annual financing cost of factoring?
