6:29 You've worked out a line of credit arrangement that allows you to borrow up to $55 million at any time. The interest rate is .59 percent per month. In addition, 4 percent of the amount that you borrow must be deposited in a non-interest-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 $23 million today and you repay it in 6 months. How much interest will you pay? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Annual interest rate b. Interest paid Answer is not complete. 7.32 %
6:29 You've worked out a line of credit arrangement that allows you to borrow up to $55 million at any time. The interest rate is .59 percent per month. In addition, 4 percent of the amount that you borrow must be deposited in a non-interest-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 $23 million today and you repay it in 6 months. How much interest will you pay? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Annual interest rate b. Interest paid Answer is not complete. 7.32 %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:9
nts
3
O 03:06:29
You've worked out a line of credit arrangement that allows you to borrow up to $55
million at any time. The interest rate is .59 percent per month. In addition, 4 percent of
the amount that you borrow must be deposited in a non-interest-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 $23 million today and you repay it in 6 months. How much interest
will you pay? (Do not round intermediate calculations and round your answer to 2
decimal places, e.g., 32.16.)
a. Annual interest rate
b. Interest paid
Answer is not complete.
7.32 X %
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