Would It Be Worth It to Incur a Compensating Balance

question 123

Multiple Choice

Would it be worth it to incur a compensating balance of $2,000 in order to get a 1.5-percent-lower interest rate on a 1-year,pure discount loan of $100,000?

• A)Yes
• B)No
• C)Not enough information is given to determine It depends upon whether $100,000 × (1 + i) or $102,000 × (1 + [i - 0.015]) is larger.The compensating balance for the lower loan rate will make sense if:
• $100,000 × (1 + i) > $102,000 × (1 + [i - 0.015])
• ($100,000/$102,000) × (1 + i) > (1 + [i - 0.015])
• 0)9804 + 0.9804i > 1 + i - 0.015
• -0)0196i > 0.0046
• I < -0.234694
• In other words, only if the rate is less than -23.47 percent.Since this is not likely to happen, the lower rate associated with the compensating balance isn't worth it.

Recognize the symptoms associated with specific psychological disorders.

Distinguish between different therapeutic approaches and treatments for psychological disorders.

Understand the role of conditioning in the development of anxiety disorders.

Comprehend the cognitive aspects and thought patterns that contribute to anxiety and phobias.