Your fiRm Has a Line of Credit with Your Local

question 27

Multiple Choice

Your firm has a line of credit with your local bank for £50,000.The loan agreement calls for interest of 9% with a 5% compensating balance requirement which is based on the total amount borrowed.
What is the effective interest rate if you need £42,750 for one year to cover your operating
Expenses?

• A)8.55%
• B)9.00%
• C)9.13%
• D)9.38%
• E)9.47%

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Definitions:

Drop Shipping

Shipping directly from the supplier to the end consumer rather than from the seller, saving both time and reshipping costs.

Shipping Cost

Expenses associated with transporting goods from one place to another, including freight charges and handling fees.

Security

The condition of being protected from or not exposed to danger or risk; the safety of a state, organization, system, or individual against criminal activity like theft or espionage.

Technological Advances

Technological advances refer to the progress in technology that enhances efficiency, productivity, and capabilities of operations and services.