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company has obtained a short-term bank loan of P500,000 at an annual interest rate of 6 with a compensating balance of P100,000 in its count. The checking account earns interest at an annual rate of 2%. Ordinarily, the company maintains a balance of P50,000 in its accour nsaction purposes. What is the effective interest rate of the loan? lect the correct response: O6.44%

company has obtained a short-term bank loan of P500,000 at an annual interest rate of 6 with a compensating balance of P100,000 in its count. The checking account earns interest at an annual rate of 2%. Ordinarily, the company maintains a balance of P50,000 in its accour nsaction purposes. What is the effective interest rate of the loan? lect the correct response: O6.44%

Essentials Of Investments
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
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Item 9 of 50 A company has obtained a short-term bank loan of P500,000 at an annual interest rate of 6 with a compensating balance of P100,000 in its checking account. The checking account earns interest at an annual rate of 2%. Ordinarily, the company maintains a balance of P50,000 in its account for transaction purposes. What is the effective interest rate of the loan? Select the correct response: O 6.44% O 8.22% O 8.56% 7.77%
Transcribed Image Text:Item 9 of 50 A company has obtained a short-term bank loan of P500,000 at an annual interest rate of 6 with a compensating balance of P100,000 in its checking account. The checking account earns interest at an annual rate of 2%. Ordinarily, the company maintains a balance of P50,000 in its account for transaction purposes. What is the effective interest rate of the loan? Select the correct response: O 6.44% O 8.22% O 8.56% 7.77%
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