If Analog computers can borrow at 9.9% for 3 years, what is the effective rate of...
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If Analog computers can borrow at 9.9% for 3 years, what is the effective rate of interest on a $815,000 loan where a 12% compensating balance is required? (Use 360 days in a year. Round your answer to 2 decimal places.) |
8.55%
16.55%
11.25%
14.00%
Homework Answers
Effective rate of interest:
= Borrowing rate/(1-Compensating balance)
= 9.9%/(1-12%)
= 11.25%
Hence, effective rate of interest is 11.25%
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