Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / Hand-to-Mouth (H2M) is currently? cash-constrained, and must make a decision about whether to delay paying one of its? suppliers, or take out a loan

Hand-to-Mouth (H2M) is currently? cash-constrained, and must make a decision about whether to delay paying one of its? suppliers, or take out a loan

Finance

Hand-to-Mouth (H2M) is currently? cash-constrained, and must make a decision about whether to delay paying one of its? suppliers, or take out a loan. They owe the supplier $11,500 with terms of 2?/10 Net? 40, so the supplier will give them a 2% discount if they pay by today? (when the discount period? expires). ? Alternatively, they can pay the full $11,500 in one month when the invoice is due. H2M is considering three? options:

Alternative? A: Forgo the discount on its trade credit? agreement, wait and pay the full $11,500 in one month.

Alternative? B: Borrow the money needed to pay its supplier today from Bank? A, which has offered a? one-month loan at an APR of 11.9%. The bank will require a? (no-interest) compensating balance of 4.7% of the face value of the loan and will charge a $105 loan origination fee. Because H2M has no? cash, it will need to borrow the funds to cover these additional amounts as well.

Alternative? C: Borrow the money needed to pay its supplier today from Bank? B, which has offered a? one-month loan at an APR of 14.9%. The loan has a 1.2% loan origination? fee, which again H2M will need to borrow to cover.

Alternative? A:

The effective annual cost is

27.43

 

27.43?%. ?(Round to two decimal? places.)

Alternative? B:

The effective annual rate is

nothing

 

?%. ?(Round to two decimal? places.)

 

I need help with Alternative B and alternative C.

Option 1

Low Cost Option
Download this past answer in few clicks

8.94 USD

PURCHASE SOLUTION

Already member?


Option 2

Custom new solution created by our subject matter experts

GET A QUOTE