What is the effective annual interest rate

Reference no: EM13289654

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 0.574 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?

(b) Suppose you need $15.20 million today and you repay it in seven months. How much interest will you pay?

Reference no: EM13289654

Questions Cloud

Find the forward price : Find the forward price of a 30 month forward contract for a stock currently priced at $36, assuming that the risk free rate is 4% compounded continuously and that dividends are paid at continuous annual rate of 2.5%.

Determine how many people are in the room : construct a block diagram and an ASMD chart for a digital systemthat counts the number of people in a room. The one doorthrough which people enter the room has a photocell that changers asignal x from 1 to 0 when the light interrupted.

Aspects of a reaction affected by the addition of a catalyst : How are the following aspects of a reaction affected by the addition of a catalyst. 1) activation energy of the reverse reaction A) Increased B) Decreased

Determine the total electric force exerted on charge : Four charged particles are at the corners of a square of side, Determine the total electric force exerted on q

What is the effective annual interest rate : The interest rate is 0.574 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.

Design the state decoder which provides a high logic level : 1. Obtain the compete state diagram showing both used and unused states and transitions. It is a self-correcting design 2. If the design is not self-correcting - modify it to obtain aself-correcting design. Show the work and draw the circuit diagra..

Find the magnitude of the average retarding force on sled : A child on a sled reaches the bottom of a hill with a velocity of 11.0, what is the magnitude of the average retarding force on the sled on the horizontal straightaway

Calculate the operating and cash cycles : Assume all sales are on credit.Calculate the operating and cash cycles.

Explain what is the limiting reagent in the reaction : Assuming that you start with 2.00 g of sodium benzoate and 5 mL of 3M HCL, what is the limiting reagent in this reaction. you may need to calculate mmoles of sodium benzoate first.

User Account

All Pages