Question
Come and Go Bank offers your firm a discount interest loan with an interest rate of 7 percent for up to $20 million, and in
Come and Go Bank offers your firm a discount interest loan with an interest rate of 7 percent for up to $20 million, and in addition requires you to maintain a 4 percent compensating balance against the face amount borrowed. What is the effective annual interest rate on this lending arrangement?
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Financial Management for Public, Health and Not-for-Profit Organizations
Authors: Steven A. Finkler, Daniel L. Smith, Thad D. Calabrese, Robert M. Purtell
5th edition
1506326846, 9781506326863, 1506326862, 978-1506326849
