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3 Cards in this Set
- Front
- Back
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Annualized Cost of not taking the discount |
Discount %/100%- Discount % x Days in a Year/ Total Payment - Discount Period |
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Effective Interest Rate |
Ratio of the amount the firm must pay to the amount the firm can use. Effective Interest Rate= Net Interest Expense/ Usable Funds Effective Interest Rate Discounted Loan= (State Rate/ 1.0- Stated Rate) Discounted Loans a) Loan Amount= Usable Funds/1.0- Stated Rate b) Interest Expense= Loan Amount x Stated Rate c) Effective Interest Rate= Net Interest Expense/ Usable Funds" In Discounted Loans since interest is paid ad the beginning and subtracted from the Loan Amount, the Effective Interest Rate will be higher thanStated Rate! Lines of Credit with commitment Fees a) Annual Cost= Average balance X Stated Rate + Commitment Fee on unused portion. Floating Lien- A loan secured by inventory. Chattel Mortgage- Secured by personal property, movable property such equipment or livestock.chvh |
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