Greetings, I'm really struggling with this problem, not sure where I'm going wrong. Any help is greatly
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Question:
Greetings,
I'm really struggling with this problem, not sure where I'm going wrong. Any help is greatly appreciated. Thank you!
Your company has arranged a revolving credit agreement for up to $65 million at an interest rate of 1.34 percent per quarter. The agreement also requires your company to maintain a compensating balance of 3 percent of the unused portion of the credit line, to be deposited in a non-interest bearing account. Your company's short-term investment account at the same bank pays an interest rate of .48 per quarter. What is the effective annual interest rate if your company borrows $30 million for one year?
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