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Posted on Jul 24, 2024

The Rasputin Brewery is considering using a public warehouse loan as part of its short-term financing. The firm will require a loan of $500,000 .

The Rasputin Brewery is considering using a public warehouse loan as part of its short-term financing. The firm will require a loan of $500,000 . Interest on the loan will be 10.5% (APR, annual compounding), to be paid at the end of the year. The warehouse charges 1.02% of the face value of the loan, payable at the beginning of the year. What is the effective annual rate (EAR) of this warehousing arrangement?

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