Bank One extends a $3 million line of credit to Castle Corp. The stated rate of...

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Bank One extends a $3 million line of credit to Castle Corp. The stated rate of interest is 9.5%. Bank One requires Castle to

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Answer 1

Answer #1

Compensating balance = 3,000,000(0.10) = $300,000

Interest for one year = 0.095(3,000,000)/2,700,000

Interest rate = 10.6%

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Answer 2

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