You 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 "closeout" prices. The interest rate for such loans at your bank, Rimrock Bank, is 9% using ordinary interest. a. What is the amount of interest on this loan? Round your answer to the nearest cent. $ b. 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. $ c. 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. $ d. (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? Do not enter the percent symbol in your answer. Do not round intermediate calculations. %

You 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 "closeout" prices. The interest rate for such loans at your bank, Rimrock Bank, is 9% using ordinary interest. a. What is the amount of interest on this loan? Round your answer to the nearest cent. $ b. 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. $ c. 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. $ d. (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? Do not enter the percent symbol in your answer. Do not round intermediate calculations. %

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 32P

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