Business, 12.10.2020 01:01, kerriscaballero12

Your company has a line of credit through a local bank. The bank requires a 6% compensating balance and charges 12% on the amount borrowed against the line. If the company needs $100,000 to purchase inventory, find the amount it should borrow, and calculate the effective annual rate on the loan (b) You’ve worked out a line of credit arrangement that allows you to borrow up to $100 million at any time. The interest rate is 0.4 percent per month. In addition, 5% of the amount that you borrow must be deposited in a non-interest bearing account (i. e. a compensating balance). Assume that your bank uses compound interest on its line of credit loans. What is the effective annual rate (EAR) on the loan? W

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Your company has a line of credit through a local bank. The bank requires a 6% compensating balance...