What interest rate would make it worthwhile to incur a compensating balance of $25,000 in order to get a 1-percent lower interest rate on a 1-year, pure discount loan of $300,000? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)       Is it worth incurring the compensating balance to obtain the lower rate?   multiple choice Yes  No

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
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What interest rate would make it worthwhile to incur a compensating balance of $25,000 in order to get a 1-percent lower interest rate on a 1-year, pure discount loan of $300,000? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)

 

 

 

Is it worth incurring the compensating balance to obtain the lower rate?

 

multiple choice

Yes 

No

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