Short term financing
Mutiara Bhd recently arranged for a line of credit with the Permata Bank. The term of the agreement called for a RM150000 maximum loan with interest set at 12% per annum for 6-month. In addition, Mutiara must maintain a 5% compensating balance in its demand deposit throughout the year.
If mutiara normally maintains RM25000 balance in its checking account with Permata Bank, what is the effective of credit through the line of credit agreement where the maximum loan amount is used for a half year?
Recompute the effective cost of credit to Mutiara if the firm has to borrow the compensating balances and it borrows the maximum possible under the loan agreement.
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short term finance and planning.
Mutiara Bhd recently arranged for a line of credit with the Permata Bank. The terms of the agreement called for a RM150,000 maximum loan with interest set at 12% per annum for 6-month. In addition, Mutiara’s must maintain a 5% compensating balance in its demand deposit throughout the year.
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PLEASE SHOW WORK P16-12 Compensating balances and effective annual rates Lincoln Industries has a line of...
PLEASE SHOW WORK
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nitiduri APK 18-8A/(Cost of short-term bank loan) The Southwest Forging Corporation recently arranged for a line of credit with the First National Bank of Dallas. The terms of the agreement called for a $100,000 maximum loan with interest set at 1 percent over prime. In addition, the firm has to maintain a 20 percent compensating balance in its demand deposit account throughout the year. The prime rate is currently 12 percent. V a. If Southwest normally maintains a $20,000 to...
PLEASE SHOW WORK
P16-12 Compensating balances and effective annual rates Lincoln Industries has a line of credit at Bank Two that requires it to pay 11% interest on its borrowing and to maintain a compensating balance equal to 15% of the amount borrowed. The firm has borrowed $800,000 during the year under the agreement. Calculate the effective annual rate on the firm's borrowing in each of the following circumstances: a. The firm normally maintains no deposit balances at Bank Two....
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