Question
hTe Rasputin Brewery is considering using a public warehouse loan as part of itsshort-term financing. The firm will require a loan of $500,000. Interest on
hTe Rasputin Brewery is considering using a public warehouse loan as part of itsshort-term financing. The firm will require a loan of $500,000. Interest on the loan will be 10.0%(APR, annualcompounding) to be paid at the end of the year. The warehouse charges 1.00%of the face value of theloan, payable at the beginning of the year. What is the effective annual rate(EAR) of this warehousingarrangement?
The effective annual rate is nothing%.(Round to two decimalplaces.)
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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
