Loan origination fee and compensating balance requirement

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Reference no: EM131188253

You are considering borrowing 1 million SEK for one month at an APR of 12%. The bank will require a (no-interest) compensating balance of 2% of the face value of the loan and will charge a 4000 SEK loan origination fee.

(a) Which total amount you must borrow to cover both the loan origination fee and the compensating balance requirement?

The total amount is.............. (round to SEK, no decimals)

(b) What is the interest expense (including the origination fee) for the one-month loan?

The interest expense is SEK. (round to SEK, no decimals)

Reference no: EM131188253

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