Purchase Solution

# Financial Management Problem Set

Not what you're looking for?

8. Compute the annual approximate interest cost of not taking a discount using the following scenarios. What conclusion can be drawn from the calculations?
- 2/10 net 20
- 2/10 net 30
- 2/10 net 40
- 2/10 net 50
- 2/10 net 60

9. On January 2, 20X1, City Hospital established a line of credit with First Union National Bank. The terms of the line of credit called for a \$200,000 maximum loan with an interest of 11 percent. Then compensating balance requirement is 15 percent of the total line of credit (with no additional fees charged).

10. What is the effective interest rate for City Hospital if 50 percent of the total amount were used during the year?

11. How would the answer to part of a change if the additional fees were \$500?

12. How would the answer to part of a change if the additional fees were \$1,000?

##### Solution Summary

The solution discusses the step-by-step answers to the financial management problem sets.

##### Solution Preview

8. Compute the annual approximate interest cost of not taking a discount using the following scenarios. What conclusion can be drawn from the calculations?

Approximate Interest rate = Discount %/(1-discount %)*365/(# of days until full payment is due - last day of discount)

- 2/10 net 20
Approximate Interest rate = 2%/(1-2%)*365/(20-10)=74.49%

- 2/10 net 30
Approximate Interest rate = 2%/(1-2%)*365/(30-10)=37.24%

- 2/10 net 40
Approximate Interest ...

##### Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

##### Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

##### Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

##### Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

##### Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.