What is the effective rate of interest on this loan

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Reference no: EM131977913

1. Your Company has a $20 million revolving credit agreement with its bank at 7% based on a calendar year.

Prior to the month of June it had borrowed $8 million.

On June 11, it borrowed another $4 million (assume the funds were available on June 11.

The bank's commitment fee is 0.15% annually.

What bank charges will the company incur for the month of June.

$63,388.90

$54,571

$49,245

$68,824

2. In order to get a special interest rate of 6% you enter into a discounted loan arrangement.

You borrow $1000 for at 6% for one year and pay the interest up front.

At the end of the year you Pay back the $1,000.

What is the effective rate of interest on this loan

7.65%

6.38%

8.04%

6.0%

Reference no: EM131977913

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