Effective annual interest rate on lending arrangement

Assignment Help Financial Management
Reference no: EM131861574

You’ve worked out a line of credit arrangement that allows you to borrow up to $55 million at any time. The interest rate is .51 percent per month. In addition, 5 percent of the amount that you borrow must be deposited in a noninterest-bearing account. Assume that your bank uses compound interest on its line of credit loans.

a. What is the effective annual interest rate on this lending arrangement? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

Annual interest rate %

b. Suppose you need $21 million today and you repay it in 6 months. How much interest will you pay? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).)

Interest paid $

Reference no: EM131861574

Questions Cloud

What is probability that consolidated builders wins both job : What is the probability that Consolidated wins at least one of the contracts? What is the probability that Consolidated Builders wins both jobs?
Problem regarding the negotiation tactic : For each of the negotiation tactic listed below, describe what the tatic is and a way you could best respond to it?
What ways is product strategy linked to product decisions : In what ways is product strategy linked to product decisions? Please help me with any suggestions and pointers on ways to go about answering these questions.
Why are some organizations that are good at innovations : Why are some organizations that are good at innovations do not seem to be enjoying the fruits of their innovation?
Effective annual interest rate on lending arrangement : What is the effective annual interest rate on this lending arrangement?
Describe 8 sources of supply : Describe 8 sources of supply (including example of what each sourcce supplies) that are used within the hospitality industry
Why is it important to lead yourself well first : Why is it important to lead yourself well first? Please include examples of some things you should do to lead yourself well.
Human resources and learn that aimee : You check in Human Resources and learn that Aimee is a nursing student who is completing her clinical rotation at the hospital.
Considering the payment-to-income limit : Considering the payment-to-income limit, what is the most they will allow Jim to spend on a monthly mortgage payment?

Reviews

Write a Review

Financial Management Questions & Answers

  Weighted average cost of capital to evaluate all investments

Why would a firm not use its weighted average cost of capital (WACC) to evaluate all proposed investments?

  Compute the operating break-even point in dollars

A new restaurant is ready to open for business. It is estimated that the food cost (variable cost) will be 40% of sales, while fixed cost will be $450,000. The first year's sales estimates are $1,250,000. The cost to start up this restaurant will be ..

  Compare and contrast the two portfolios

Compare and contrast the two portfolios and you need to make explicit reference to EMH in your analysis - explain the strategies you used

  Identify some common miscellaneous itemized deductions

Identify some common miscellaneous itemized deductions and identify any limitations that are imposed on the deductibility of these items.

  Characteristics does not apply to a financial lease

Which one of these characteristics does not apply to a financial lease?

  Compute the implied one year forward rate

Compute the implied one year forward rate at the beginning of year 3?

  What is the break-even per unit cost

Assuming the average sales price is $16,000 per car, what is the break-even per unit cost?

  Best describes investment risk

Which of the following best describes investment risk?

  What is the firms current receivable balance

A surgical supply company sells on terms on 3/10, net 30. That means customers that pay in 10 days get a 3% discount, while customers that do not take the discount must pay in 30 days. What is the firm's average collection period? What is the firm's ..

  What will be the required return on your portfolio

what will be the required return on your $5.5 million portfolio?

  Arrangement with her financial advisor to invest

Eli has made an arrangement with her financial advisor to invest $3,600 a year in an equity mutual fund. The Financial adviser determines Eli should earn a minimum of 10% on the investment. If Eli follows this plan, how much will she have in 3 years?

  The worlds largest chip maker-production technology

VP of Marketing Noah Vale believes that the world's largest chip maker, Intel, is in a ton of trouble. When Andy Grove left, the company was valued at $160B.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd