296
150.
Correct answer b.
The compensating balance required is $3,000,000 as shown below.
Effective interest rate
=
($100,000,000 x .10) ÷ X = 10.31
X
=
$97,000,000
Compensating balance
=
$100,000,000 - $97,000,000
=
$3,000,000
151.
Correct answer c.
The effective interest rate is 8.75% as shown below.
Effective interest rate
=
($100,000 x .07) ÷ [$100,000 – ($100,000 x .20)]
=
$7,000 ÷ $80,000
=
8.75%
152.
Correct answer b.
The compensating balance required is $2,440,000 as shown below.
Effective interest rate
=
($100,000,000 x .10) ÷ X = 10.25
X
=
$97,560,000
Compensating balance
=
$100,000,000 - $97,560,000
=
$2,440,000
153.
Correct answer b.
Frame will pay $1,131,250 as shown below.
Interest =
($10,000,000 x .02) + ($20,000,000 x .04) + ($5,000,000 x .02)
=
$1,100,000
Fees
=
[$10,000,000 x (.005 ÷ 12 x 3)] + [$15,000,000 x (.005 ÷ 12 x 3)]
=
$31,250
Total
=
$1,100,000 + $31,250
=
$1,131,250
154.
Correct answer c.
The effective interest rate is 8.42% as shown below.
Effective interest rate
=
($100,000,000 x .08) ÷ ($100,000,000 - $5,000,000)
=
$8,000 ÷ $95,000,000
=
8.42%
155.
Correct answer d.
The residual theory of dividends treats dividends as strictly a financing decision with
the payment of cash dividends determined solely by the availability of acceptable investment proposals.