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Answer the following questions. a. Firm QLD Inc. can borrow $25 thousand for two months from a bank at an APR (Annual Percentage Rate)
Answer the following questions. a. Firm QLD Inc. can borrow $25 thousand for two months from a bank at an APR (Annual Percentage Rate) of 6.6%. The loan has a loan origination fee of 2.0% on the principal of the loan. The bank also requires that QLD Inc. keep an amount of 8% of the face value of the loan in a compensating balance account as long as the loan is outstanding. The bank pays interests of 0.4% APR with two months compounding on the compensating balance account. Calculate the effective annual rate (EAR) of this loan. Keep two decimal places, e.g. 9.99%. (5 marks) Start typing here I
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