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57 Your company has arranged a revolving credit agreement for up to $60 million at an interest rate of 1.27 percent per quarter. The agreement
57 Your company has arranged a revolving credit agreement for up to $60 million at an interest rate of 1.27 percent per quarter. The agreement also requires your company to maintain a compensating balance of 4 percent of the unused portion of the credit line, to be deposited in a noninterest-bearing account. Your company's short-term investment account at the same bank pays an interest rate of 43 per quarter. What is the effective annual interest rate if your company borrows $25 million for one year? Multiple Choice 5.27% 5.17% 6.63% 5.80% 5.68%
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