b) Danial Haris Corp. needs RM450,000 for 9 months and is considering these 3 borrowing alternatives. Compute the Effect

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B Danial Haris Corp Needs Rm450 000 For 9 Months And Is Considering These 3 Borrowing Alternatives Compute The Effect 1 (48.85 KiB) Viewed 29 times

b) Danial Haris Corp. needs RM450,000 for 9 months and is considering these 3 borrowing alternatives. Compute the Effective Interest Rate (EIR) for each of them: Raj'iee Bank This discounted loan requires an average compensating balance of 10 percent and an annual interest of 8 percent. (3 marks) Muaamalat Bank The bank offers revolving credit agreement for RM500,000 at a stated interest rate of 9 percent and a commitment fee of 5 percent on the unused portion. The bank requires the company to maintain a compensating balance of RM50,000 in its current account. However the company has RM20,000 in its account at present. (4 marks) CWK Bank It offers a simple interest loan at 11 percent with a compensating balance of 15 percent. The face value and the interest are due at the end of the year. (2 marks) Based on the calculation of EIR above, identify the best financing alternative for Danial Haris Corp. (1 mark)