Question
Wilson's Dry Goods has a line of credit with a local bank for $250,000. The loan agreement calls for interest of 7.6 percent with a
Wilson's Dry Goods has a line of credit with a local bank for $250,000. The loan agreement calls for interest of 7.6 percent with a compensating balance requirement of 5 percent, which is based on the total amount borrowed. What is the effective interest rate if the firm needed $138,000 for one year to cover its expansion costs?
| A. | 8.38% | |
| B. | 8.55% | |
| C. | 7.60% | |
| D. | 8.00% | |
| E. | 8.13% |
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Financial Management Theory And Practice
Authors: Prasanna Chandra
9th Edition
9339222571, 978-9339222574
