9. Compensating Balances. The stated bank loan rate is 8%, but the loan requires a com- pensating...
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9. Compensating Balances. The stated bank loan rate is 8%, but the loan requires a com- pensating balance of 10% on which no interest is earned. What is the effective interest rate on the loan? What happens to the effective rate if the compensating balance is doubled to 20%? (LOS)
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Fundamentals Of Corporate Finance
ISBN: 9780073382302
6th Edition
Authors: Richard A Brealey, Stewart C Myers, Alan J Marcus
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