A company has an outstanding one-year bank loan of $500,000 at a stated interest rate of 8.2
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A company has an outstanding one-year bank loan of $500,000 at a stated interest rate of 8.2 percent. The company is required to maintain a 21 percent compensating balance in its checking account. The company would maintain a zero balance in this account if the requirement did not exist. What is the effective interest rate of the loan?
Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
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