1. If Analog computers can borrow at 9.8% for 3 years, what is the effective rate of interest on a $835,000 loan where a 16% compensating balance is required? (Use 360 days in a year. Round your answer to 2 decimal places.)
8.97%
11.67%
16.97%
14.42%
2. Price Corp. is considering selling to a group of new customers and creating new annual sales of $410,000. 4% will be uncollectible. The collection cost on these accounts is 6% of new sales, the cost of producing and selling is 78% of sales and the firm is in the 31% tax bracket. What is the profit on new sales?
$319,800
$29,966
$33,948
$43,948