Your company is considering three options for financing its short term operations i. Borrow Tk.25 million from Shuktara Bank at 15 percent interest rate and a 20 percent compensating balance requirement signing a 60 day promissory note. ii. Borrow Tk.25 million from Chandramukhi Bank at 15 percent discount interest. ii. Forego discount on a trade credit on terms 3/10, net 50. Strictly based on effective cost, which option would you select and why?

Your company is considering three options for financing its short term operations i. Borrow Tk.25 million from Shuktara Bank at 15 percent interest rate and a 20 percent compensating balance requirement signing a 60 day promissory note. ii. Borrow Tk.25 million from Chandramukhi Bank at 15 percent discount interest. ii. Forego discount on a trade credit on terms 3/10, net 50. Strictly based on effective cost, which option would you select and why?

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Description: Your company is considering three options for financing its short term operationsi. Borrow Tk.25 million from Shuktara Bank at 15 percent interest rate and a 20 percentcompensating balance requirement signing a 60 day promissory note.ii. Borrow Tk.2

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 14P

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