Response to the following problem:
Evaluate the effective annual cost of each of the following credit terms:
a. Trade credit, with terms of 2/10, net 30, paying on the net day.
b. Bank loan with single payment interest of 5% for six months.
c. Bank loan with discount interest of 4% for six months.
d. Bank loan with single payment interest of 2% for three months, with a compensating balance of 10%.
e. Bank loan with single payment interest of 3% for three months, with a compensating balance of 5%.
f. A one-year loan secured with accounts receivable, with a service fee of 5% (payable at the end of the loan) and a 5% rate of interest.