Charlie's Snake Shop has an outstanding 120-day bank loan of $300,000 at an annual interest rate of 3.90%. The company is required to maintain a 15% compensating balance in its chequing account. What is the annual interest cost on the loan? The company has idle cash in the amount of $20,000 that will count toward the compensating balance. Select one: a. 2.85% Ob. 2.62% Oc. 2.14% Od 7.96%

Charlie's Snake Shop has an outstanding 120-day bank loan of $300,000 at an annual interest rate of 3.90%. The company is required to maintain a 15% compensating balance in its chequing account. What is the annual interest cost on the loan? The company has idle cash in the amount of $20,000 that will count toward the compensating balance. Select one: a. 2.85% Ob. 2.62% Oc. 2.14% Od 7.96%

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter1: Introduction And Goals Of The Firm

Section: Chapter Questions

Problem 2.2CE

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