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Intro Autodrive Corp. has no spare cash and just arranged a line of credit for $50 million. The interest on any money borrowed is 16%
Intro
Autodrive Corp. has no spare cash and just arranged a line of credit for $50 million. The interest on any money borrowed is 16% (EAR) and there is a 15% compensating balance requirement on the unused balance, i.e., 15% of the money not withdrawn must be kept in a non-interest bearing account with the bank.
Attempt 1/8 for 10 pts.
Part 1
What is the annual rate if the company borrows $24 million for one year?
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