Would It Be Worth It to Incur a Compensating Balance

question 137

Multiple Choice

Would it be worth it to incur a compensating balance of $4,000 in order to get a 1.5-percent-lower interest rate on a 1-year, pure discount loan of $300,000?

• A) Yes, if the interest rate is less than 13.64 percent
• B) No, if the interest rate is less than 13.64 percent
• C) Yes, if the interest rate is more than 1.5 percent
• D) Not enough information is given to determine

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Definitions:

External Forecasting

External forecasting involves predicting future trends and the impact of external factors on an organization's operations, including market demand, economic conditions, and technological changes.

Strategic Planning Process

A methodical approach to imagining a preferred future and converting this vision into general goals or objectives along with a series of actions to reach them.

Strategic Intent

A declaration of the course an organization plans on taking to achieve its longer-term goals. It focuses on aligning organizational resources and energies towards a unified goal.

Core Values

Fundamental beliefs or guiding principles that dictate behavior and action within an organization.