Trail wolf traders borrows 100000 from All Africa bank . The prime rate at the date the loan is negotiated is 10%. The loan involves a 120-day note with interest payable at the end of the 120 days . Interest is set at a floating rate of 2% above prime rate. After 60 days the prime rate decreases to 9%. Assume a 360 day financial year. 

Calculate the effective interest rate for the 120 days note and also calculate the effective annual rate of the 120 day note rolled over each 120 days for the year under the same terms and circumstances?

Answer rating: 100% (QA)

To calculate the effective interest rate for the 120day note we need to calculate the interest payab... View the full answer