Reference no: EM131509522

A company requires a $100,000 annual loan and borrows on a discount interest basis at a nominal annual rate of 11 percent. If the company must actually receive $100,000 net proceeds, then what must be the face value of the note?

Select one:

$ 89,000

$112,360

$100,000

$111,000

$108,840

A firm plans to borrow $300,000 from its bank for one year. The rate of interest is 10%, but a compensating balance of 15% is required. What is the effective rate of interest?

Select one: Less than 11.4 percent

More than 11.4 percent, but less than 11.6 percent

More than 11.6 percent, but less than 11.8 percent

More than 11.8 percent