You've worked out a line of credit arrangement that allows you to borrow up to $60...

 

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You've worked out a line of credit arrangement that allows you to borrow up to $60 million at any time. The interest rate is .58 percent per month. In addition, 6 percent of the amount that you borrow must be deposited in a noninterest-bearing account. Assume that your bank uses compound interest on its line-of-credit loans. a. What is the effective annual interest rate on this lending arrangement? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Suppose you need $20.68 million today and you repay it in six months. How much Interest will you pay? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1.234.567.89.) a. b. Effective annual rate Total interest paid You've worked out a line of credit arrangement that allows you to borrow up to $60 million at any time. The interest rate is .58 percent per month. In addition, 6 percent of the amount that you borrow must be deposited in a noninterest-bearing account. Assume that your bank uses compound interest on its line-of-credit loans. a. What is the effective annual interest rate on this lending arrangement? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Suppose you need $20.68 million today and you repay it in six months. How much Interest will you pay? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1.234.567.89.) a. b. Effective annual rate Total interest paid

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a To calculate the effective annual interest rate on the line of credit arrangement we need to take ... View the full answer