Line of credit arrangement

Assignment Help Financial Management

Reference no: EM131918753

You’ve worked out a line of credit arrangement that allows you to borrow up to $40 million at any time. The interest rate is .615 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.

Required:

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

Effective annual rate %

(b) Suppose you need $15 million today and you repay it in six months. How much interest will you pay? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567). Round your answer to 2 decimal places (e.g., 32.16).)

Total interest paid $

Reference no: EM131918753

Questions Cloud

What changes in operations have been made in response : What changes in operations have been made in response to these initiatives? How well-organized were these changes?

Calculate the original momentum of the fullback : A 100 kg fullback is running at 3.2 m/s to the east and is stopped in 0.75 s by a head-on tackle by a tackler running due west.

Describe the characteristics of white-collar victims : Describe the characteristics of white-collar victims. Determine the nature and extent of the various consequences of white-collar crime.

Explain gap in the literature or some new development : The purpose of this task is for you to demonstrate your ability to critically evaluate information and present that information to an audience or your peers

Line of credit arrangement : You’ve worked out a line of credit arrangement that allows you to borrow up to $40 million at any time.

What is the period of this same pendulum on the moon : On Earth, you swing a simple pendulum in simple harmonic motion with a period of 1.6 seconds. What is the period of this same pendulum on the Moon?

What are the relevant decision variables : What are the relevant decision variables? What are the constraints? Explain. What is the right mix of sales for the optimized solution?

What is the magnitude of the angular acceleration : A fan is turned off, and its angular speed decreases from 10.0 rad/s to 6.3 rad/s in 5.0 s. What is the magnitude of the angular acceleration of the fan?

What is the effective annual interest rate on line of credit : Ignoring the commitment fee, what is the effective annual interest rate on this line of credit?

User Account

All Pages