Would It Be Worth It to Incur a Compensating Balance

question 15

Multiple Choice

Would it be worth it to incur a compensating balance of $10,000 in order to get a 1-percent-lower interest rate on a 1-year,pure discount loan of $500,000?

• A)Yes
• B)No
• C)Not enough information is given to know It depends upon whether $500,000 × (1 + i) or $510,000 × (1 + [i - 0.01]) is larger.The compensating balance for the lower loan rate will make sense if:
• $500,000 × (1 + i) > $510,000 × (1 + [i - 0.01])
• ($500,000/$510,000) × (1 + i) > (1 + [i - 0.01])
• 0)9804 + 0.9804i > 1 + i - 0.01
• -0)0196i > 0.0096
• I < -0.4697959
• In other words, only if the rate is less than -46.98 percent.Since this is not likely to happen, the lower rate associated with the compensating balance isn't worth it.

Comprehend the financial and organizational impacts of employee turnover and recruitment costs.

Differentiate between various psychological constructs impacting organizational behavior, such as hope, emotional intelligence, and self-motivation.

Articulate the components and importance of attitudes, job satisfaction, and organizational commitment in the workplace.

Evaluate strategies for enhancing workplace diversity and inclusivity, specifically through company policies like flexible work arrangements.

---

Definitions:

Constructive Criticism

Feedback given to individuals in a way that acknowledges both strengths and areas for improvement, intending to help them grow or improve.

Destructive Feedback

Feedback that is negative, unhelpful, and not constructive, potentially causing harm or discouragement.

Surface Listener

An individual who listens to someone speak without fully engaging with or understanding the depth of the conversation.

Ineffective Listener

An individual who struggles to fully comprehend, retain, or respond appropriately to information communicated by others.