Question
Western Union has grated GAMING Ltd a line of credit that allows it to borrow up to $50 million at any time. The interest rate
Western Union has grated 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? (10pts)
- Suppose GAMING Ltd need $9 million today and repay it in six months. How much interest will it pay? (10pts)
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Financial Accounting with International Financial Reporting Standards
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
4th edition
1119504309, 1-119-50340-8, 9781119503408 , 978-1119504306
