, 12.07.2019 01:30 imgraciebaker

# Suppose jim spontaneously decides to treat all his friends to burgers and fries. he has already spent his excess cash from his paycheck, so he decides to put it on his credit card and pay for it later. the total cost for the meal for his group of friends including the tip is \$135.47. his credit card has an interest rate of 24.99%. if he makes payments of \$25 per month, how long would it take him to pay for that spontaneous purchase? how much would jim end up spending on this purchase? how much interest did he pay?

The reynolds corporation buys from its suppliers on terms of 2/11, net 60. reynolds has not been utilizing the discounts offered and has been taking 60 days to pay its bills. mr. duke, reynolds corporation vice president, has suggested that the company begin to take the discounts offered. duke proposes that the company borrow from its bank at a stated rate of 16 percent. the bank requires a 12 percent compensating balance on these loans. current account balances would not be available to meet any of this compensating balance requirement. a. calculate the cost of not taking a cash discount. (use a 360-day year. do not round intermediate calculations. input your answer as a percent rounded to 2 decimal places.) b. what is the effective rate of interest on the bank loan?