1. STR TRK Ltd. is trying to arrange financing for its working capital requirement next year. They could borrow from its bank on
(a) simple interest basis for one year at 12% pa simple interest.
(b) borrow on a three-month renewable loan at 11.5%pap
(c) borrow on a loan at 10.0% compounded weekly. W hat is the EAR of these facilities assuming 365 day per year?
2. A leather cushion maker in Richmond requires a trade facility to pay for its import of $850,000 raw leather from Argentina. The bank has recommended using the bills of exchange to pay for its imports. How much will the company receive if they issue a bill of exchange at $850,000 and the bank charges 3.5% pa return for this 270 day trade facility?