1) You purchase goods on credit terms of 4/15, net 50. What is the cost of not taking the 4% discount?
2) You borrow $800,000 from the bank to pay your supplier. The bank wants a compensating balance of 15%. You want to borrow to cover for the compensating balance as well. How much will you borrow?
3) You plan to get a 270-day $500,000 simple interest loan at 8%. What is the effective annual rate of the loan? Assume that a year is 360 days.