Your bank offers you a $10,000 line of credit with an interest rate of 2 percent per
Fantastic news! We've Found the answer you've been seeking!
Question:
Your bank offers you a $10,000 line of credit with an interest rate of 2 percent per quarter. The loan agreement also requires that 4 percent of the unused portion of the credit line be deposited in a non-interest bearing account as a compensating balance. Your short-term investments are paying 1.50 percent per month. What is your effective annual interest rate on this arrangement if you do not borrow any money on this credit line during the year?
Related Book For
Vector Mechanics for Engineers Statics and Dynamics
ISBN: 978-0073398242
11th edition
Authors: Ferdinand Beer, E. Russell Johnston Jr., David Mazurek, Phillip Cornwell, Brian Self
Posted Date: