1. المملكة العربية السعودية وزارة التعليم العالي جامعة الإمام محمد بن سعود الإسلامية كلية الاقتصاد والعلوم الإدارية قسم التمويل والاستثمار المستوى الرابع مقرر مبادئ التمويل والاستثمار العام الجامعي : 1434- 1435هـ الفصل الدراسي الثاني الواجب التكميلي رقم 2 رقم الشعبة :............... التــــــــاريخ: / / 1435هـ مقدم للدكتور / توفيق البشير إعداد الطالب :................................................ الرقم الجامعي........................

2. Home work A company needs to increase its working capital to 3 xxxxxxx riyals, and there are several possible alternatives for funding: 1.Dispense cash discount payment when buying from a supplier that gives trade credit terms 3/15, net 90. 2.Get a 1 year short-term loan from the first bank at an interest rate of 10%, note that is required to keep 15% as a compensating balance. 3.Get a 1 year short-term loan from the second bank at a discounted interest rate of 8%, and the bank requires to retain 25% of the value of the loan as a compensating balance. 4.Get a 1 year short-term loan from the third bank at normal interest rate of 11 %. Question: help the company to choose an alternative that reduces the real cost of funding? 2مبادئ التمويل والاستثمار - مال 102

3. Solution to Problem 1. Calculation the cost of the first alternative: Dispense cash discount payment when buying from a supplier that gives trade credit terms 2/10, net 40. 2.Calculation the cost of the second alternative: Get a 1 year short- term loan from the first bank at an interest rate of 8%, note that is required to keep 15% as a compensating balance. Note that the company needs to get 3 xxxxxxx riyals, that will receive after excluding the compensating balance. So, we calculate the total value of the loan to get 3 xxxxxxx riyals for the company. 3مبادئ التمويل والاستثمار - مال 102

4. 4 Solution to Problem مبادئ التمويل والاستثمار - مال 102

5. Solution to Problem The effective interest rate can be obtained using the following formula: 5مبادئ التمويل والاستثمار - مال 102

6. Solution to Problem 3.Calculation the cost of the third alternative: Get a 1 year short-term loan from the second bank at a discounted interest rate of 5%, and the bank requires to retain 20% of the value of the loan as a compensating balance. First we calculate the Face Value of the loan to collect 3 xxxxxxx riyals. 6مبادئ التمويل والاستثمار - مال 102

7. Solution to Problem The effective interest rate can be obtained using the following formula: 4. Calculation of the cost of the fourth alternative: Get a 1 year short-term loan from the third bank at normal interest rate of 11%. (Without Compensating Balance and simple interest) Effective interest rate = Nominal Interest Rate = 0000%. Because: Face Value of the Loan = Net Cash Received 7مبادئ التمويل والاستثمار - مال 102

8. Answer to the question: help the company to choose the best alternative that reduces the cost of funding? 8 The Best Alternative Effective Interest Rate Alterna tives 1 2 3 4 Solution to Problem مبادئ التمويل والاستثمار - مال 102