Fancy footwear has a line of credit with a local bank in the amount of $80,000. the loan agreement calls for interest of 7 percent with a compensating balance of 5 percent, which is based on the total amount borrowed. the compensating balance will be deposited into an interest-free account. what is the effective interest rate on the loan if the firm needs to borrow $75,000 for one year to cover operating expenses?

Recently, it was observed that people have started saving more rather than spending. this has impacted the demand for luxury goods and services. the decline in the demand led to unemployment in the related sectors. what can be a primary solution to reduce the unemployment levels in the country? a. increase the interest rates b. impose fine for savings c. force industries to rehire employees d. reduce the interest rates e. import goods and services

Which of the following actions is most likely to result in a decrease in the money supply? a. the required reserve ratio for banks is decreased. b. the discount rate on overnight loans is lowered. c. the federal reserve bank buys treasury bonds. d. the government sells a new batch of treasury bonds. 2b2t

You have just been hired as a financial analyst for barrington industries. unfortunately, company headquarters (where all of the firm's records are kept) has been destroyed by fire. so, your first job will be to recreate the firm's cash flow statement for the year just ended. the firm had $100,000 in the bank at the end of the prior year, and its working capital accounts except cash remained constant during the year. it earned $5 million in net income during the year but paid $800,000 in dividends to common shareholders. throughout the year, the firm purchased $5.5 million of machinery that was needed for a new project. you have just spoken to the firm's accountants and learned that annual depreciation expense for the year is $450,000; however, the purchase price for the machinery represents additions to property, plant, and equipment before depreciation. finally, you have determined that the only financing done by the firm was to issue long-term debt of $1 million at a 6% interest rate. what was the firm's end- of-year cash balance? recreate the firm's cash flow statement to arrive at your answer