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Question 16 Covidfree Corp. has a credit line of P1,500,000. The bank requires compensating balance of 15% on outstanding loan and 10% on unused loan. The corporation borrows P1,200,000 at 20% interest. What is the effective interest rate ? 20% 21% 23.5%

Question 16 Covidfree Corp. has a credit line of P1,500,000. The bank requires compensating balance of 15% on outstanding loan and 10% on unused loan. The corporation borrows P1,200,000 at 20% interest. What is the effective interest rate ? 20% 21% 23.5%

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 16 Covidfree Corp. has a credit line of P1,500,000. The bank requires compensating balance of 15% on outstanding loan and 10% on unused loan. The corporation borrows P1,200,000 at 20% interest. What is the effective interest rate ? 20% 21% 23.5% 24.2%
Transcribed Image Text:Question 16 Covidfree Corp. has a credit line of P1,500,000. The bank requires compensating balance of 15% on outstanding loan and 10% on unused loan. The corporation borrows P1,200,000 at 20% interest. What is the effective interest rate ? 20% 21% 23.5% 24.2%
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