effective rate of interest
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1. Delilah's Haircuts can borrow from its bank at 13 percent to take a cash discount. The terms of the cash discount are 2/15, net 55. Should the firm borrow the funds? Explain.
2. Maxim Air Filters, Inc. plans to borrow $300,000 for one year. Northeast National Bank will lend the money at 10 percent interest and require a compensating balance of 20 percent. What is the effective rate of interest?
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This provides the steps to calculate the effective rate of interest
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1. Delilah's Haircuts can borrow from its bank at 13 percent to take a cash discount. The terms of the cash discount are 2/15, net 55. ...
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