Effective annual interest rate on this lending arrangement

Assignment Help Business Management

Reference no: EM133641459

Question

You've worked out a line of credit arrangement that allows you to borrow up to $64 million at any time. The interest rate is .42 percent per month. In addition, 4 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.

What is the effective annual interest rate on this lending arrangement?

Suppose you need $26 million today and you repay it in 6 months. How much interest will you pay?

Reference no: EM133641459

Questions Cloud

Percentage return on total cost under the revised proposal : What is the percentage return on total cost under the revised proposal? Is the revised proposal financially feasible?

What constant expected growth rate of free cash flow : you expect to have free cash flows of $1.5 million. What constant expected growth rate of free cash flow is consistent with your current stock price?

Explain why corporations in the consumer finance services : Explain why corporations in the Consumer Finance Services Industry have the highest debt-to-equity ratio, while firms in Oil and Gas have the lowest?

Holding period return on municipal bond investment : The holding period return on a municipal bond investment is fully free of the federal income tax.

Effective annual interest rate on this lending arrangement : What is the effective annual interest rate on this lending arrangement?

What is the effective income or egi for the property : A property has a potential gross income of $1,500,000 other income of 9k and vacancy loss of 45k. What is the effective income or EGI for the property?

About your selected company financial health : The market value of a firm's common stock depends on many factors. What do findings indicate about your selected company's financial health?

What do you think might be the most significant decisions : What would you recommend? Beyond 2020, what do you think might be the most significant decisions that Cook and Gou must make?

What do the represent in term of challenge and opportunities : What do these represent in terms of challenges and opportunities with respect to sustainability, diversity, inclusion, globalization, security and governance.

User Account

All Pages