Question: a. What interest rate would make it worthwhile to incur a compensating balance of $26,000 in order to get a 1-percent lower interest rate on

a. What interest rate would make it worthwhile to incur a compensating balance of $26,000 in order to get a 1-percent lower interest rate on a 1-year, pure discount loan of $305,000 ? b. Is it worth incurring the compensating balance to obtain the lower rate? Complete this question by entering your answers in the tabs below. What interest rate would make it worthwhile to incur a compensating balance of $10,000 in order to get a 1-percent lower interest rate on a 1 -year, pure discount loan of $225,000 ? Note: Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
