EBK FOUNDATIONS OF FINANCIAL MANAGEMENT
EBK FOUNDATIONS OF FINANCIAL MANAGEMENT
17th Edition
ISBN: 9781260464900
Author: BLOCK
Publisher: MCGRAW-HILL LEARNING SOLN.(CC)
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Chapter 8, Problem 19P

Zerox Copying Company plans to borrow $172,000 . New Jersey National Bank will lend the money at one-half percentage point over the prime rate at the time of 17 ½ percent (18 percent total) and requires a compensating balance of 21 percent. The principal in this case will be funds that the firm can effectively use in the business. This loan is for one year. What is the effective rate of interest? What would the effective rate be if Zerox were required to make four quarterly payments to retire the loan?

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EBK FOUNDATIONS OF FINANCIAL MANAGEMENT

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