Kerry Corporation must pay $500,000 to its supplier. Kerry's bank has offered a 270-day simple interest loan with a quoted interest rate of 12 percent. The bank requires a 20 percent compensating balance requirement on business loans. If Kerry currently holds no funds at the lending bank, what is the loan's effective annual rate (r_EAR)? In your computations, assume there are 360 days in a year.

Answer rating: 100% (QA)

To find the loans effective annual rate rEAR we need to take into account the compensating balance r... View the full answer