Exercise II.

The bank has granted an overdraft facility to ABC company for the period. The overdraft facility amount is USD 1950000. The interest rate on the overdraft facility taken is 12% per annum, and the overdraft facility commission is set at 5% and is to be paid in advance. It is anticipated that within the first period (i.e. 60 days), the company will benefit from 1755000 of the overdraft facility granted, and within the next 210 days from 1852500 of the overdraft facility granted. Calculate the effective annual cost of using the overdraft facility by the company