Would It Be Worth It to Incur a Compensating Balance

question 85

Multiple Choice

Would it be worth it to incur a compensating balance of $15,000 in order to get a 2-percent-lower interest rate on a 1-year, pure discount loan of $1,000,000?

• A) yes
• B) no
• C) not enough information is given to determine It depends upon whether $1,000,000 x (1 + i) or $1,015,000 x (1 + [i - .02]) is larger. The compensating balance for the lower loan rate will make sense if:
• $1,000,000 x (1 + i) > $1,015,000 x (1 + [i - .02])
• ($1,000,000/$1,015,000) x (1 + i) > (1 + [i - .02])
• )9852 + .9852i > 1 + i - .02
• -)0148i > -.0052
• I < .35135
• In other words, only if the rate is less than 35.14%. Since this is likely to happen, the lower rate associated with the compensating balance is worth it.

Understand the relationship between media portrayals and the reinforcement or challenge of dominant ideologies.

Discover the origins and impact of culture wars on media representations and societal values.

Evaluate the representation of different social classes and ethnicities within media and the concept of "false consciousness."

Understand joint venture formation, including the recognition and measurement of contributed assets.

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Definitions:

Homosexual Contact

Interactions, including sexual relationships, between individuals of the same sex.

Sharing of Needles

The practice of using the same needles by multiple individuals, commonly associated with increased risk of transmitting infections like HIV and hepatitis.

Adolescent Pregnancy

Pregnancy in females who have not yet reached legal adulthood, which varies by country, typically involving females in their teenage years.

Contraceptive Use

The utilization of methods or devices to prevent pregnancy as part of sexual and reproductive health.