The Rasputin Brewery is considering using a public warehouse loan as part of its short-term financing. The

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The Rasputin Brewery is considering using a public warehouse loan as part of its short-term financing. The firm will require a loan of $540,000. Interest on the loan will be 9.6% (APR, annual compounding) to be paid at the end of the year. The warehouse charges 1% of the face value of the loan, payable at the beginning of the year. What is the effective annual rate of this warehousing arrangement?

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Corporate Finance The Core

ISBN: 9781292158334

4th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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