Cost of bank loanData Back-Up Systems has obtained a $25,000, 60-day bank loan at an annual interest rate of 16%, payable at maturity.(Note: Assume a 365-day year.)

a.How much interest (in dollars) will the firm pay on the 60-day loan?

b.Find the 60-day rate on the loan.

c.Annualize your result in part b to find the effective annual rate for this loan, assuming that it is rolled over every 60 days throughout the year under the same terms and circumstances.