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Business Book Publishing Needs to Borrow $700,000 in Order to Finance

question 33

Essay

Business Book Publishing needs to borrow $700,000 in order to finance its new inventory.Two banks in town offered different loan terms: Marine Bank offered a 10% loan with a 15% compensatory balance to be paid back in quarterly payments.McLean National Bank offered Business Book Publishing a 12% loan to be paid back semi-annually.Which loan terms should Business Book Publishing take?


Definitions:

Psychological Contract

Beliefs held by employees regarding the reciprocal obligations and promises between them and their organization.

Performance Expectations

Standards or benchmarks set by an organization or leader against which an individual's or group's performance is measured.

Socialization Process

The process through which individuals learn and internalize the values, behaviors, and norms of a society or group.

Uncertainty Reduction Theory

A communication theory that suggests individuals engage in strategies to reduce uncertainties about others in initial interactions.

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