You've worked out a line of credit arrangement that allows you to borrow up to $60...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You've worked out a line of credit arrangement that allows you to borrow up to $60 million at any time. The interest rate is .58 percent per month. In addition, 6 percent of the amount that you borrow must be deposited in a noninterest-bearing account. Assume that your bank uses compound interest on its line-of-credit loans. a. What is the effective annual interest rate on this lending arrangement? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Suppose you need $20.68 million today and you repay it in six months. How much Interest will you pay? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1.234.567.89.) a. b. Effective annual rate Total interest paid You've worked out a line of credit arrangement that allows you to borrow up to $60 million at any time. The interest rate is .58 percent per month. In addition, 6 percent of the amount that you borrow must be deposited in a noninterest-bearing account. Assume that your bank uses compound interest on its line-of-credit loans. a. What is the effective annual interest rate on this lending arrangement? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Suppose you need $20.68 million today and you repay it in six months. How much Interest will you pay? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1.234.567.89.) a. b. Effective annual rate Total interest paid
Expert Answer:
Answer rating: 100% (QA)
a To calculate the effective annual interest rate on the line of credit arrangement we need to take ... View the full answer
Related Book For
Corporate Finance Core Principles And Applications
ISBN: 9781260571127
6th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
Posted Date:
Students also viewed these finance questions
-
Youve worked out a line of credit arrangement that allows you to borrow up to $40 million at any time. The interest rate is .527 percent per month. In addition, 4 percent of the amount that you...
-
The following post-closing trial balance was prepared for Speedy Prints, Inc., but some balances were entered in the wrong column. Prepare a corrected post-closing trial balance. Assume all accounts...
-
Kamsky Inc., which follows IFRS, had the following balances and amounts appear on its comparative financial statements at year end: (a) Calculate income taxes paid in 2017 and discuss the related...
-
Canfor Corporation is a major integrated forest products company based in Vancouver. Suppose Canfor's financial statements reported the following items for affiliated companies whose shares Canfor...
-
Mary Kay Morrow began working for Hallmark in 1982. At the beginning of 2002, Hallmark adopted the Hallmark Dispute Resolution Program, which required, among other things, that claims against the...
-
The Cutting Department of Hong Manufacturing has the following production and cost data for July. Instructions(a) Determine the equivalent units of production for (1) Materials and (2) Conversion...
-
2. Consider a consumer with CES utility u(x1, x2) = x + x2- (a) Does this consumer have preferences the "increasing difference prop- erty"? How about the strict increasing difference property? Make a...
-
write python code {"tweet_list": [ {"created at": "Sun Nov 17 17:05:44 +0000 2019", "id": 1196112194435506179, "text": "Accurate. @Tesla #Cybertruck", "favorite count": 0, "retweeted": false,...
-
You've worked out a line of credit arrangement that allows you to borrow up to $60 million at any time. The interest rate is .58 percent per month. In addition, 6 percent of the amount that you...
-
You are dispensing Foradil. The pharmacist tells you not to bother with putting the "do not use after" date on the box, telling you, "Just go ahead and dispense it." What should you do, and why
-
A passcode can have 4 or 5 digits. Digits can be repeated and leading 0s are allowed. So, 1234 would be a 4 digit code that is different from 01234, which is a 5 digit code. How many different...
-
If you sleep an average of 7.9 hours each night, how many hours do you sleep in a year? Assume that this year is a non-leap year
-
Given the array of Figures 6.1(a) and (b), find the nulls of the total field when d = /4 and a. = 0 b. B = + 2 d/2 d/2 (a) Two infinitesimal dipoles
-
Household income for purpose of the premium tax credit includes all of the following except: Oa. a. Any tax-exempt income Ob. Nontaxable Social Security benefits Oc. AGI of the taxpayer's dependents...
-
You are standing at x = 9.0 km and your assistant is standing at x = 3.0 km. Lightning bolt 1 strikes at x = 0 km and lightning bolt 2 strikes at x = 12.0 km. You see the flash from bolt 2 at t = 10...
-
Based on the following information, calculate the expected return. Probability of State of Economy State of Rate of Return Economy If State Occurs Recession .35 -.14 Normal .50 .16 oom .15 .43
-
The 2019 balance sheet of Dyrdeks Skate Shop, Inc., showed $486,000 in the common stock account and $5.04 million in the additional paid-in surplus account. The 2020 balance sheet showed $536,000 and...
-
Suppose your company needs $45 million to build a new assembly line. Your target debt-equity ratio is .45. The flotation cost for new equity is 7 percent, but the flotation cost for debt is only 3...
-
Let \(\left\{\mathbf{X}_{n}ight\}\) be a sequence of \(d\)-dimensional random vectors, \(\mathbf{X}\) be a \(d\) dimensional random vector, and \(g: \mathbb{R}^{d} ightarrow \mathbb{R}^{q}\) be a...
-
Let \(\left\{X_{n}ight\}_{n=1}^{\infty}\) be a sequence of random variables. Suppose that for every \(\varepsilon>0\) we have that \[\limsup _{n ightarrow \infty}...
-
A result from calculus is Kronecker's Lemma, which states that if \(\left\{b_{n}ight\}_{n=1}^{\infty}\) is a monotonically increasing sequence of real numbers such that \(b_{n} ightarrow \infty\) as...
Study smarter with the SolutionInn App