Youve just taken out the loan for 75000 the stated simple

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You've just taken out a loan for $75,000. The stated (simple) interest rate on this loan is 10 percent, and the bank requires you to maintain a compensating balance equal to 15 percent of the initial face amount of the loan. You currently have $20,000 in your checking account, and you plan to maintain this balance. The loan is an add-on installment loan which you will repay in 12 equal monthly installments, beginning at the end of the first month.

Refer to Scenario 22-1. What is the nominal annual add-on interest rate on this loan?

1. 10.00%

2. 24.00%

3. 16.47%

4. 20.00%

What is the nominal annual add-on interest rate on this loan?

1. 10.00%

2. 24.00%

3. 16.47%

4. 20.00%

Reference no: EM13395071

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