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You've worked out a line of credit arrangement that allows you to borrow up to GHC 50 million at any time. The interest rate is 0.5 percent per month. In addition, 5 percent of the amount that you borrow must be deposited in a non- interest bearing account. Assume your bank uses compound interest on its line of credit loans. What is the effective annual interest rate on this lending arrangement? #randomized

You've worked out a line of credit arrangement that allows you to borrow up to GHC 50 million at any time. The interest rate is 0.5 percent per month. In addition, 5 percent of the amount that you borrow must be deposited in a non- interest bearing account. Assume your bank uses compound interest on its line of credit loans. What is the effective annual interest rate on this lending arrangement? #randomized

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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You've worked out a line of credit arrangement that allows you to borrow up to GH¢ 50 million at any time. The interest rate is 0.5 percent per month. In addition, 5 percent of the amount that you borrow must be deposited in a non- interest bearing account. Assume your bank uses compound interest on its line of credit loans. What is the effective annual interest rate on this lending arrangement? #randomized
Transcribed Image Text:You've worked out a line of credit arrangement that allows you to borrow up to GH¢ 50 million at any time. The interest rate is 0.5 percent per month. In addition, 5 percent of the amount that you borrow must be deposited in a non- interest bearing account. Assume your bank uses compound interest on its line of credit loans. What is the effective annual interest rate on this lending arrangement? #randomized
O A. 6.50 percent B. 6.62 percent OC. 6.81 percent D. 6.87 percent O E. 6.94 percent
Transcribed Image Text:O A. 6.50 percent B. 6.62 percent OC. 6.81 percent D. 6.87 percent O E. 6.94 percent
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