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Unformatted text preview: takes discounts and it reduces A/P to $83.33 so it needs $416.67 cash and borrows $641.03. 0 1   641.03 641.03 96.15 Discount interest +128.21128.21 Compensating balance 512.82 416.67 With a financial calculator, input the following data, N = 1, PV = 416.67, PMT = 0, FV = 512.82, and then solve for I = 23.08%. Because the cost of nonfree trade credit is less than the cost of the bank loan, Malone should forge discounts and reduce its payables only to $250,000....
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 Spring '08
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 Interest

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