Rachel's has a $50,000 line of credit with Uptown Bank. Compensating balance: a specified balance (usually some % of the committee amount) a borrower of a loan is asked to maintain in a low-interest or noninterest-bearing account at th… Experts are tested by Chegg as specialists in their subject area. 29 terms. 100,000 loan that requires a compensating balance of 20%, it would have to leave … However, the effective rate of interest is on the higher side in case of compensating balances loans. 17 terms. The primary objective of such a balance is to reduce the lending cost of a borrower. 100, 000 l o a n t h a t r e q u i r e s a c o m p e n s a t i n g b a l a n c e o f 20. MBA 551 FinAcct - Module 4. Margin accounts held with brokers. MGT Quiz. $412,000. If you borrow $50,000,000, the compensating balance will be: Compensating balance = $50,000,000(0) = $2,500,0 00. Exam 1 Questions. All of the following can be classified as cash and cash equivalents, except * a. View the full answer. Question. But interest is received at a certain rate on the total loan amount. Compensating balance c. Line of credit d. Bank loan. Cash equivalent C. EFT D. Compensating balance. B. cleanup loan. What is a compensating balance? ... Other Quizlet sets. E. roll-over. B2 Conditional practice drill sentences. 130 terms. Minimum deposits required to be maintained in connection with a borrowing arrangement. Savings account balances. Cash that is restricted and not available for current operations is reported in the balance sheet as: B. Medsurg 2 exam three bp. 114 terms. This additional balance serves as security for the lender and can help borrowers secure lower interest rates. karlee_ann_howard. Fidelity Bank requires a compensating balance of 24 percent, discounts the loan, - 1827… juan59451 juan59451 10/12/2020 Business College answered Summit Record Company is negotiating with two banks for a $157,000 loan. Cash is normally listed a. on the income statement. However, the borrower cannot access these funds until … Interest rate % b. Is it worth Effectively it acts as collateral and thus compensates the lender for the risk of making the loan. Deposits held as compensating balances ... A P10,000 minimum balance in Snoopy's current account which is maintained to avoid service charge. 16 terms. Investments. Compensating balance. Tom_Giaquinto. A minimum cash balance required by a bank is called: A. Savings account balances. D. line of credit. _____9. Hence the yield is higher for the lender since same amount of interest is earned on lower funds disbursed. c. Margin accounts held with brokers. english Vocabularies. b. 45 terms. What interest rate would make it worthwhile to incur a compensating balance of $18,000 in order to get a 1 percent lower interest rate on a 1 year, pure discount loan of $265,000? Outstanding checks B. What is the effective rate on an 8% loan subject to a 20% minimum compensating balance? A compensating balance is a loan term that requires borrowers to maintain a specific balance with the lender. What is a compensating balance? jnixo009. Compensating balances represent: A. Round your final answer to 2 decimal places.) 1.Under compensating balance the actual amount disbursed is lower than the loan amount. Legally restricted deposit held as compensating balance against borrowing arrangement. d. Minimum deposits required to be maintained in connection with a borrowing arrangement. Jasmine_Schomaker. By shifting the balance of naval power in the Pacific, Midway allowed US forces to take the offensive for the first time. Compensating balance refers to that practice wherein a bank requires a borrower to maintain on deposit a certain portion of a loan during the term of the loan. Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Do not round intermediate calculations. CHAPTER 7. Logistics Company had the A. Redeemable preference shares acquired and due in 60 days b. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, redefine, rent, mortgage, pawn, sell, exchange, transfer, give away or destroy it, or to exclude others from doing these things, as well as to … About You: … nanzread520. 34 terms. A) $546,250 B) $758,264 C) $558,824 D) $71,250. The compensating balance is based on the total amount borrowed and will be held in an interest-free account. C. letter of credit. a. A fraction of the available credit on a loan agreement deposited by the borrower with the bank in a low or non-interest-bearing account is called a: A. compensating balance. Total compensation for this role is market competitive, including a starting base salary of $110,000, depending on location and experience, as well … As contemplated in accounting, cash includes; a. What is the effective annual interest rate if the firm borrows $35,000 for one year? Note: If the pH was not normal and the HCO3 was still acidotic, it would be partial compensation. 15 terms. An adjusting entry is required for A. 22 terms. The agreement calls for an interest rate of 10% on fund used, a 15% compensating balance, and a commitment fee of 1% on the unused amount of the credit line. We review their content and use your feedback to keep the quality high. caseyyowens. Journal entries and not required for reconciling items related to the bank balance because: A. 100% (1 rating) Compensating balance is amount of minimum bank account balance which will be required to be maintained by the borrower with the lender and hence t …. Renata_Petersen8. b Compensation. B. cleanup loan. If the deposit is not legally restricted because of an informal compensating balance agreement, the compensating balance is part of cash if the related loan is short-term. D. A balance held in a time or demand deposit account that is equal to the interest currently due on a loan. (Negative amount should be indicated by a minus sign. The portion of any demand deposit, time deposit, or certificate of deposit maintained by a corporation which constitutes support for existing borrowing arrangements of the corporation with the lending institution. Funds in a bank account that can't be spent. The bank requires a 15% compensating balance. _____ 5. a. PLP2060 Final Part 2. How much money will Analog need to borrow in order to end up with $475,000 spendable cash? The line of credit calls for an interest rate of 8 percent and a compensating balance of 4 percent. History and Political Background. in Business. ... Other Quizlet sets. 45 terms. MULTIPLE CHOICE - THEORY. In cases where compensating balance arrangement exist without agreements that restrict the use of cash amounts shown on the balance sheet, companies should describe the arrangement and the amounts involved in the notes ... OTHER QUIZLET SETS. blancaneus. d. Temporary investments serving as collateral for outstanding loans. General Rent-All's officers arrange a $50,000 loan for the company. ... Other Quizlet sets. finance; 24. Show your work please a. Get it here. b. Pols Exam #2. Jake_McCollough. tax codes ch 4-5. 68 terms. What is the effect of compensating balance on an interest rate of a debt? For instance, a company takes a loan of $50,000 from a bank and agrees never to use $5,000. 11. ... Other Quizlet sets. Boohbear15. Money only b. 11 terms. What is compensated respiratory alkalosis? Because Gripp currently holds no funds at the lending bank, it must borrow enough to have $765,000 available to pay its suppliers after covering the compensating balance. Doc/AG film 2016 exam 2. 46 terms. About the Role: Quizlet’s Benefits & Compensation Manager is responsible for managing our compensation and benefits programs to deliver on a core element of our employee value proposition. Commercial papers held and due for repayment in 90 days c. Equity investments d. A compensating balance is the balance a borrower must keep with a lender, usually when taking out an installment loan or line of credit for their business. It means the effective loan amount is $45,000 only. C. compensating balance. a. The Changing Political Environment 1933-1945. The battle marked the first major US victory against Japan and was a turning point in the war. What is a compensating balance? Minimum deposits required to be maintained in connection with a borrowing arrangement. 7. 16 terms. Joanna2510. Fin Accounting Ch. Your total repayment will be based on the full amount of the loan including the compensating balance, so at the end of the year you will owe: Interest = $50,000,000(1 + 0) 12 Interest = $53,274,354. chapter 8. 29 terms. A compensating balance is a minimum deposit that must be maintained in a bank account by a borrower. This position will direct and plan the day-to-day operations of all compensation and benefits activities in collaboration with internal stakeholders and executive leaders. 10% c. 8.13%; Question: What is the effective rate on an 8% loan subject to a 20% minimum compensating balance? _____10. Phavinee. Cash in the bank B. Zagnator. A compensating balance is a balance that must be kept with a lender in order for a borrower to qualify for a line of credit or instalment loan. Deposits in transit C. Bank errors D. NSF checks. The bank requires a compensating balance equal to 15 percent on loans to companies. Study anywhere with the Quizlet mobile app. Total compensation for this role is market competitive, including a starting base salary of $141,000 - $195,000, depending on location and experience, … On the flip side, if the pH was not normal but the HCO3 was normal, it would be uncompensated. Total compensation for this role is market competitive, including a starting base salary of $76,000 - $130,000, depending on location and experience, as well as company stock options. 9.6% b. c. Temporary investments serving as collateral for outstanding loans. The calculation of interest of compensating balance loan is calculated as, if there is a borrowing of $180,000 at the interest rate of 8%, simple interest generates $14,400 in a year over the life of the loan. How was the US able to win the war in the Pacific quizlet? Assuming that the compensating balance would not otherwise be maintained, the effective annual interest cost if the firm borrows $200,000 for one year is closest to D. line of credit. B. Ian-Kilgour. For example, if a firm takes out a. Show your work please a. Our answer is: metabolic acidosis, fully compensated by the … The initial compensating response to an acute respiratory alkalosis is a modest decline in ECF bicarbonate concentration as the result of cellular buffering.Subsequent renal responses result in decreased ECF bicarbonate concentration through reduced renal bicarbonate reabsorption. The primary goal of a compensating balance is to reduce the lender’s expenses of extending and servicing the loan. Equity securities may qualify as cash equivalents. ~ compensating balance ~ precautionary ~ transactional - ca (the transactional motive involves the use of cash to pay for planned corporate expenses such as supplies, payrolls, and taxes, etc.) E. revolving credit arrangement. Compensating balance is the least or minimum balance that an organization or an individual needs to keep with the lender. Gripp Corporation needs $765,000 to pay one of its suppliers.

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