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Effective annual interest rate on this lending arrangement

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You have recently worked out a line of credit arrangement that allows you to borrow up to $50 million at anytime. The interest rate for this is 0.47% per month. In addition to this, 4% of the amount you borrow must be deposited in a non-interest-bearing account. Assume that your bank uses compound interest on its line of credit loans. What is the effective annual interest rate on this lending arrangement?

Reference no: EM132596062

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