The effective annual interest rate on this arrangement

Assignment Help Financial Management

Reference no: EM132059640

You have worked out a line of credit arrangement that allows you to borrow up to $50 million at any time. The interest rate is 0.5 percent per month. In addition, 7 percent of the amount that you borrow must be deposited in a non-interest bearing account.

Assume your bank uses compound interest on its line of credit loans. What is the effective annual interest rate on this lending arrangement?

Reference no: EM132059640

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