Company A is currently cash-constrained, and must make a decision about whether to delay paying...
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Finance
Company A is currently cash-constrained, and must make a decision about whether to delay paying one of its suppliers, or taking out a loan. They owe the supplier $15804, and they can borrow the money from Bank A, which has offered to lend the firm $15804 for 1 month(s) at an APR (compounded) of 16%. The bank will require a (no-interest) compensating balance of 6% of the face value of the loan and will charge a $246 loan origination fee,
which means Hand-to-Mouth must borrow even more than the $15804. Compute the EAR of the loan.
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