Question: A ) What interest rate would make it worthwhile to incur a compensating balance of $ 1 1 , 5 0 0 in order to

A)What interest rate would make it worthwhile to incur a compensating balance of $11,500 in order to get a 0.65-percent lower interest rate on a 2-year, pure discount loan of $190,000?
B) Is it worth incurring the compensating balance to obtain the lower rate?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!