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You've worked out a line of credit arrangement that allows you to borrow up to $48 million at any time. The interest rate is .45
You've worked out a line of credit arrangement that allows you to borrow up to $48 million at any time. The interest rate is .45 percent per month. In addition, 4 percent of the amount that you borrow must be deposited in a non-interest-bearing account. Assume that your bank uses compound interest on its line of credit loans. a. What is the effective annual interest rate on this lending arrangement? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16 . b. Suppose you need $28 million today and you repay it in 6 months. How much interest will you pay? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16
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