On January 2, 20X1, Morton Hospital established a line of credit with First National Bank. The terms of the line of credit called for a $400,000 maximum loan with an interest rate of 6%. The compensating balance requirement is 5% of the total line of credit with no additional fees charged. What is the effective interest rate for Morton Hospital is 50% of the total amount were used during the year?
On January 2, 20X1, Morton Hospital established a line of credit with First National Bank. The terms of the line of credit called for a $400,000 maximum loan with an interest rate of 6%. The compensating balance requirement is 5% of the total line of credit with no additional fees charged. What is the effective interest rate for Morton Hospital is 50% of the total amount were used during the year?
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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On January 2, 20X1, Morton Hospital established a line of credit with First National Bank. The terms of the line of credit called for a $400,000 maximum loan with an interest rate of 6%. The compensating balance requirement is 5% of the total line of credit with no additional fees charged.
- What is the effective interest rate for Morton Hospital is 50% of the total amount were used during the year?
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