Your brother has just taken out a loan for $75,000. The stated (simple) interest rate on this

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Your brother has just taken out a loan for $75,000. The stated (simple) interest rate on this loan is 10 percent, and the bank requires him to maintain a compensating balance equal to 15 percent of the initial face amount of the loan. He currently has $20,000 in his checking account, and he plans to maintain this balance. The loan is an add-on installment loan which he will repay in 12 equal monthly installments, beginning at the end of the first month.

What is the effective annual rate (EAR) on this loan?

Posted Date: May 19, 2024 03:07 AM

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Your brother has just taken out a loan for $75,000. The stated (simple) interest rate on this

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