You are paying 5% on your fixed-rate mortgage & earning 6% on your stock index fund. You are almost certain the stock market will remain steady for the foreseeable future. You recently received money from a very generous aunt. You decide either to invest the money in your stock index fund or pay down your mortgage. Your tax rate is 20%. What should you do? a. Invest in the index fund because your after-tax mortgage cost is 4,0% & you are earning an after-tax rate of 4.8% on your index fund.
b. Pay down your mortgage because your after-tax mortgage cost is 4,8% & you are earning an after-tax rate of 4% on your index fund.
c. Invest in the index fund because your after-tax mortgage cost is 4.8% & you are earning an after-tax rate of 4% on your index fund.
d. None of the analyses is correct.

Neveready flashlights inc. needs $317,000 to take a cash discount of 3/15, net 70. a banker will loan the money for 55 days at an interest cost of $13,200. a. what is the effective rate on the bank loan? (use a 360-day year. do not round intermediate calculations. input your answer as a percent rounded to 2 decimal places.) b. how much would it cost (in percentage terms) if the firm did not take the cash discount but paid the bill in 70 days instead of 15 days? (use a 360-day year. do not round intermediate calculations. input your answer as a percent rounded to 2 decimal places.) c. should the firm borrow the money to take the discount? no yes d. if the banker requires a 20 percent compensating balance, how much must the firm borrow to end up with the $317,000? e-1. what would be the effective interest rate in part d if the interest charge for 55 days were $7,200?

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1. all other things equal, according to the law of demand, when the price of a good falls, the demand for the good falls the demand for the good rises the quantity demanded of the good falls the quantity demanded of the good rises 2. when a market is in equilibrium, the quantity of the good that buyers are willing and able to buy exactly equals the quantity that sellers are willing and able to sell cannot be determined is less than the quantity that sellers are willing and able to sell is greater than the quantity that sellers are willing and able to sell 3. which of the following factors does not influence the demand for a good or service? consumer (buyer) income the price of related goods the number of sellers buyer expectations 4. when the number of sellers in a market increases, demand rises supply rises the price rises, all else equal the number of buyers falls