Leo Manufacturing Company (LMC) has applied for BDT. 1,000,000 for 4 months a single payment note to Eastern Bank Ltd (EBL). According to the credit rating of LMC and long-term banking with EBL, the bank has agreed to provide short-term loans as single payment notes in a floating rate concept to LMC. EBL decides to loan charge 1.5% above the prime rate, where the prime rate is assuming 1st 30 days 6.25%, 2nd 30 days 6.75%, 3rd 30 days 6.15%, and 4th 30 days 6%. 

What is the EAR of this short-term loan? 

Calculate, how much amount needs to pay as interest by LMC against that loan?

Answer rating: 100% (QA)

To calculate the Effective Annual Rate EAR of the shortterm loan we need to consider the different i... View the full answer