What is effective annual interest rate-otal interest paid

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You’ve worked out a line of credit arrangement that allows you to borrow up to $60 million at any time. The interest rate is .589 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.

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

Effective annual rate             %

b. Suppose you need $29.45 million today and you repay it in five months. How much interest will you pay? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Total interest paid            $

Reference no: EM132050171

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