Problem 8-17 Effective rate under different terms [LO8-2]

Your company plans to borrow $12 million for 12 months, and your banker gives you a stated rate of 22 percent interest. Calculate the effective rate of interest for the following types of loans. a. Simple 22 percent interest with a compensating balance of 16 percent. (Use a 360-day year. Input your answer as a percent rounded to 2 decimal places.)

b. Discounted interest (with no compensating balance). (Input your answer as percent rounded to 2 decimal places.)

c. An installment loan (12 payments). (Input your answer as a percent rounded to 2 decimal places.)

d. Discounted interest with a compensating balance of 8 percent. (Use a 360-day year. Input your answer as a percent rounded to 2 decimal places.)