Question
Youve worked out a line of credit arrangement that allows you to borrow up to $45 million at any time. The interest rate is .41
Youve worked out a line of credit arrangement that allows you to borrow up to $45 million at any time. The interest rate is .41 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? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Annual interest rate | % |
b. | Suppose you need $11 million today and you repay it in 6 months. How much interest will you pay? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Interest paid | $ |
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