How much interest will you pay
Course:- Finance Basics
Reference No.:- EM13298417

Assignment Help >> Finance Basics

You've worked out a line of credit arrangement that allows you to borrow up to $ 50 million at any time. The interest rate is .72 percent per month. In addition, 4 percent of the amount that you borrow must be deposited in a non-interest-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?

(b) suppose you need $ 15 million today and you repay it in six months. How much interest will you pay?


Put your comment

Ask Question & Get Answers from Experts
Browse some more (Finance Basics) Materials
Briefly explain the primary roles of the U.S. Federal Reserve, the Federal Reserve Chairman, and the Federal Reserve Board. Indicate each party's effectiveness in today's ec
Describe why a financial lease represents the secured loan in which the lender's overall debt service stream is taxable as ordinary income to the lessor/lender.
Evaluate the board's philosophy on executive compensation. Discuss the metrics tied to the CEO's inventive compensation. Are they sound metrics or not. Determine if compensati
Vortex Inc. is considering launching a new product but there is some uncertainty about how the product will actually be received. Accordingly, your junior analyst has provid
The following bytes (shown in hex) represent a person's name as it would be stored in a computer's memory. Each byte is a padded ASCII code. Determine the name of each perso
Grand Opening Bank is offering a one-time investment opportunity for its new customers. A customer opening a new checking account can buy a special savings bond for $300300
Here are the key assumptions: annual fixed direct costs = $40,000, annual overhead allocation = $10,000, variable cost per test = $8, and expected volume = 10,000 tests. Wha
International Capital Budgeting An investment in a foreign subsidiary is estimated to have a positive NPV, after the discount rate used in the calculations is adjusted for p