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AIG needs an addtional $50 million in working capital to pay retention bonuses to key corporate… 1 answer below » AIG needs an addtional $50 million in working capital to pay retention bonuses to key corporate executives. It takes out a one year loan with a 20% compensating balance. The stated rate of interest is 9%. The loan will be repaid in 12 monthly installments. (a) How much should AIG actually borrow to meet its working capital needs? (b) What will AIG’s monthly payment be? (c) Is 9% AIG’s “true cost” of borrowed funds? Analyze using formula 8-6 and discuss your results. Sep 08 2015 02:50 PM
