You are considering borrowing 1 million SEK for one month at an APR of 12%. The bank

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You are considering borrowing 1 million SEK for one month at an APR of 12%. The bank will require a (no-interest) compensating balance of 6% of the face value of the loan and will charge a 5000 SEK loan origination fee.

(a) Which total amount you must borrow to cover both the loan origination fee and the compensating balance requirement?

The total amount is SEK. (round to SEK, no decimals)

(b) What is the interest expense (including the origination fee) for the one-month loan?

The interest expense is SEK. (round to SEK, no decimals)

The EAR is %. (round to two decimals)

Related Book For answer-question

Fundamentals of Corporate Finance

ISBN: 978-0132148238

2nd edition

Authors: Berk, DeMarzo, Harford

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Posted Date: Jun 11, 2022 02:34 AM

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You are considering borrowing 1 million SEK for one month at an APR of 12%. The bank

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Expert Answer:

Actual borrowed amount 1000000 5000 094 106914894 Compensating Balance 10691489360... View the full answer

Fundamentals of Corporate Finance

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