Question
Juno Industrial Supply has a line of credit of $150,000 with an interest rate of 7.5 percent. The loan agreement requires a compensating balance of
Juno Industrial Supply has a line of credit of $150,000 with an interest rate of 7.5 percent. The loan agreement requires a compensating balance of 2.5 percent of the total amount borrowed, which will be held in an interest-free account. What is the effective interest rate if the firm borrows $115,000 for one year?
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Case Studies in Finance Managing for Corporate Value Creation
Authors: Robert F. Bruner, Kenneth Eades, Michael Schill
7th edition
007786171X, 77861711, 978-0077861711
