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
Hello, so I calculated that the present value of a perpetuity was 922.96 which would be less than the $1000 I was offered to pay for the perpetuity (I would only start recei
Black River Adventures has net income of $1,718, interest expense of $815, sales of $19,950, and costs of $11,080. What is the amount of the depreciation expense if the firm
Write a 3-5 page analysis of team dynamics in a team of which you have been a part. Incorporate what you have learned about your emotional intelligence skills into this pape
How did Darwin's teaching influence Lombroso's idea of criminals? How did he identify born criminals? And was there a saving grace to Lombroso's theory (Hint: Determinism)?
Prepare an executive level report related to the target acquisition company's financial and operational strengths and weaknesses that addresses the acquiring company's interna
Al's Sports Store has sales of $2,840, cost of goods sold of $2,070, inventory of $536, and accounts receivable of $429. How many days, on average does it take the firm to s
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
As of this morning, your firm had a ledger balance of $3,007 with no outstanding deposits or checks. Today, your firm deposited 2 checks in the amount of $120 each and wrote