O 14.26% 10 20% Nocci O 1120%

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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Holland Construction Co. has an outstanding 180-day bank loan of $394,000 at an annual interest rate of 9.8%. The company is required to maintain a
13% compensating balance in its checking account. What is the effective interest rate on the loan? Assume the company would not normally maintain this
average amount (Use 360 days in a year. Round your answer to 2 decimal places.)
Multiple Choice
14.26%
1026%
13.26%
11:26%
Transcribed Image Text:Holland Construction Co. has an outstanding 180-day bank loan of $394,000 at an annual interest rate of 9.8%. The company is required to maintain a 13% compensating balance in its checking account. What is the effective interest rate on the loan? Assume the company would not normally maintain this average amount (Use 360 days in a year. Round your answer to 2 decimal places.) Multiple Choice 14.26% 1026% 13.26% 11:26%
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