1. Come and Go Bank offers your firm a discount interest loan with an interest rate of 10 percent for up to $26 million, and in addition requires you to maintain a 2 percent compensating balance against the face amount borrowed. Required: What is the effective annual interest rate on this lending arrangement? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

2. In exchange for a $400 million fixed commitment line of credit, your firm has agreed to do the following: 1. Pay 1.84 percent per quarter on any funds actually borrowed. 2. Maintain a 2 percent compensating balance on any funds actually borrowed. 3. Pay an up-front commitment fee of 0.29 percent of the amount of the line. Required: Based on this information, answer the following: (a) Ignoring the commitment fee, what is the effective annual interest rate on this line of credit? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Effective annual rate % (b) Suppose your firm immediately uses $214 million of the line and pays it off in one year. What is the effective annual interest rate on this $214 million loan? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Effective annual rate %

3. You’ve worked out a line of credit arrangement that allows you to borrow up to $60 million at any time. The interest rate is .592 percent per month. In addition, 2 percent of the amount that you borrow must be deposited in a noninterest-bearing account. Assume that your bank uses compound interest on its line-of-credit loans. Required: (a) What is the effective annual interest rate on this lending arrangement? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Effective annual rate % (b) Suppose you need $33.32 million today and you repay it in four months. How much interest will you pay? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567). Round your answer to 2 decimal places (e.g., 32.16).) Total interest paid $

4. Consider the following financial statement information for the Amaryliss Corporation: Item Beginning Ending Inventory $10,082 $10,880 Accounts receivable 5,351 5,881 Accounts payable 5,652 5,993 Net sales $139,003 Cost of goods sold 86,813 Required: Assume all sales are on credit. Calculate the operating and cash cycles. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Operating cycle days Cash cycle days