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What is annualized cost of the bank loan

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Paymaster Enterprises has arranged to finance its seasonal working-capital needs with a short-term bank loan. The loan will carry a rate of 15 percent per annum with interest paid in advance? (discounted). In addition, Paymaster must maintain a minimum demand deposit with the bank of 8 percent of the loan balance throughout the term of the loan. If Paymaster plans to borrow $80,000 for a period of 3 months, what is the annualized cost of the bank loan?

Reference no: EM133272845

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