Question
Western Union has granted GAMING Ltd a line of credit that allows it to borrow up to $50 million at any time. The interest rate
- Western Union has granted GAMING Ltd a line of credit that allows it to borrow up to $50 million at any time. The interest rate is .47% per month. But GAMING Ltd is required to have 4% of the borrowed amount deposited in a non-interest-bearing account. Assume the bank uses compound interest on its line of credit loans. Show your work on the following:
What is the effective annual interest rate on this lending arrangement? (5pts)
Suppose GAMING Ltd need $9 million today and repay it it in six months. How much interest will it pay? (5pts)
You must solve the question in Excel and submit your Original Excel file showing the formulas.
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Fundamentals of Corporate Finance
Authors: Richard Brealey, Stewart Myers, Alan Marcus
9th edition
1259722619, 978-1260049190, 1260049191, 978-1259722615
