Working capital to pay retention bonuses, Accounting Basics

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Working capital to pay retention bonuses

AIG needs an addtional $50 million in working capital to pay retention bonuses to key corporate executives. It takes out a one year loan with a 20% compensating balance. The stated rate of interest is 9%. The loan will be repaid in 12 monthly installments.

(a) How much should AIG actually borrow to meet its working capital needs?

(b) What will AIG's monthly payment be?

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Accounting Basics: Working capital to pay retention bonuses

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Accounting Basics: Working capital to pay retention bonuses

Reference No:- TGS057286

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Recent Questions Asked Accounting Basics

Q : Budgeted markup percentage using full cost approach

Q : Calculate chudzicks total bill

Q : Minimum transfer price that heating division accept

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Request for Solution File

Ask an Expert for Answer!!

Accounting Basics: Working capital to pay retention bonuses

Reference No:- TGS057286

Recent Questions Asked Accounting Basics

Q : Budgeted markup percentage using full cost approach

Q : Calculate chudzicks total bill

Q : Minimum transfer price that heating division accept

Q : Allen break-even point in units

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Q : What was its cost of goods sold

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