Assignment:
Q1. Apex Supplies borrows £1 million at 12%, payable in one year. If Apex is required to maintain a compensating balance of 20%, what is the effective percentage cost of its loan (in pounds)?
Q2. The Olivera Corporation, a manufacturer of olive oil products, needs to acquire €1 million in funds today to expand a pimiento-stuffing facility. Banca di Roma has offered the company a choice of an 11% loan payable at maturity or a 10% loan on a discount basis. Which loan should Olivera choose?
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.