1. Jetson Co. has an $80,000 line of credit with a 12 percent interest rate and a 10 percent compensating balance requirement that is based on the total amount borrowed. What is the effective annual interest rate if the firm needs $45,000 for one year?
A) 12.54%
B) 12.67%
C) 12.12%
D) 13.33%
2. Super Mart has sales of $626,000. The cost of goods sold is equal to 68 percent of sales. The beginning accounts receivable balance is $75,534 and the ending accounts receivable balance is $76,209. How long on average does it take the firm to collect its receivables?
A) 44.24 days
B) 36.18 days
C) 30.08 days
D) 66.52 days
3. Yusef has a defined benefit retirement plan with his company. He has worked for the company for 35 years, but he is ready to retire. His average ending salary is $100,000. His company uses a factor of 0.02 for determining the annual benefits of the retirement plan. How much of an annual retirement benefit should Yusef expect to receive from his company when he retires?
A. $20,000/year
B. $33,333/year
C. $70,000/year
D. $120,000/year