our company has arranged a revolving credit agreement for up to $71 million at an interest rate of 1.40 percent per quarter. The agreement also requi our company to maintain a compensating balance of 5 percent of the unused portion of the credit line, to be deposited in a noninterest-bearing account. Your company's short-term investment account at the same bank pays an interest rate of .54 per quarter. What is the effective annual interes ate if your company borrows $36 million for one year?
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- A bank offers your firm a revolving credit arrangement for up to $86 million at an interest rate of 2.15 percent per quarter. The bank also requires you to maintain a compensating balance of 2 percent against the unused portion of the credit line, to be deposited in a non-interest-bearing account. Assume you have a short-term investment account at the bank that pays 1.50 percent per quarter, and assume that the bank uses compound interest on its revolving credit loans. a. What is your effective annual interest rate (an opportunity cost) on the revolving credit arrangement if your firm does not use it during the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Effective annual interest rate % b. What is your effective annual interest rate on the lending arrangement if you borrow $50 million immediately and repay it in one year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2…A bank offers your firm a revolving credit arrangement for up to $68 million at an interest rate of 1.70% per quarter. The bank also requires you to maintain a compensating balance of 4% against the unused portion of the credit line, to be deposited in a non interest- bearing account. Assume you have a short-term investment account at the bank that pays 1.05% per quarter, and assume that the bank uses compound interest on its trevolving credit loans. (Do not round intermediate calculetions. Round the final answers to 2 decimal places.) a. What is your effective annual interest rate (an opportunity cost) on the revolving credit arrangement if your firm does not use It during the year? Effective annual Interest rate b. What is your effective annual interest rate on the lending arrangement if you borrow $35 million immediately and repay it in one year? Effective annual interest rate 1% c. What is your effective annual interest rate if you borrow $68 milion Immediately and repoy it in one…Your company has arranged a revolving credit agreement for up to $82 million at an interest rate of 1.51 percent per quarter. The agreement also requires your company to maintain a compensating balance of 4 percent of the unused portion of the credit line, to be deposited in a non-interest bearing account. Your company's short-term investment account at the same bank pays an interest rate of .65 per quarter. What is the effective annual interest rate if your company does not use the revolving credit arrangement during the year? Multiple Choice O O O O 3.30% 6.18% 3.85% 2.89% 2.63%
- You've worked out a line of credit arrangement that allows you to borrow up to $70 million at any time. The interest rate is .375 percent per month. In addition, 4 percent of the amount that you borrow must be deposited in a noninterest-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., 32.1 b. Suppose you need $25 million today and you repay it in eight months. How much interest will you pay? Note: Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1,234,567.89. a. Effective annual rate b. Total interest paid %You've worked out a line of credit arrangement that allows you to borrow up to $70 million at any time. The interest rate is .391 percent per month. In addition, 5 percent of the amount that you borrow must be deposited in a noninterest - bearing account. Assume that your bank uses compound interest on its line of credit loans. 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., 32.1 Suppose you need $15 million today and you repay it in eight months. How much interest will you pay? Note: Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to 2 decimal places, e.g., 1, 234, 567.89.Xu Salon has a line of credit of $150,000 with an interest rate of 1.625 percent per quarter. The credit line requires that 2.25 percent of the unused portion of the credit line be deposited in a non-interest-bearing account as a compensating balance. Xu Salon's short-term investments are earning .35 percent per quarter. If the line of credit goes unused all year, what is the effective annual interest rate on this arrangement? Assume any funds borrowed or invested use compound interest. Give typing answer with explanation and conclusion
- New Town Bank offers you a line of credit of $50,000 with an interest rate of 2.1 percent per quarter. The loan agreement also requires that 2.5 percent of the unused portion of the credit line be deposited in a non-interest-bearing account as a compensating balance. Short-term investments are currently paying .68 percent per quarter. What is the effective annual interest rate on the line of credit if you borrow the entire amount for one year? Assume any funds borrowed or invested use compound interest. O 8.40 percent 8.89 percent Q 8.67 percent O 8.51 percent O 8.62 percentNew Town Bank offers you a line of credit of $50,000 with an interest rate of 2.1 percent per quarter. The loan agreement also requires that 2.5 percent of the unused portion of the credit line be deposited in a non-interest-bearing account as a compensating balance. Short-term investments are currently paying .68 percent per quarter. What is the effective annual interest rate on the line of credit if you borrow the entire amount for one year? Assume any funds borrowed or invested use compound interest. 8.40 percent 8.89 percent O 8.67 percent 8.51 percent 8.62 percentThe York Company has arranged a line of credit that allows it to borrow up to $45 milion at any time. The interest rate is .621 percent per month. Additionally, the company must deposit 3 percent of the amount borrowed in a non-interest bearing account. The bank uses compound interest on its line-of-credit loans. What is the effective annual rate on this line of credit? Multiple Choices 6.40% 7.71% 7.95% 7.06% 8.83%
- Zenith Bank charges an interest rate of 16.9% per annum on a loan to Samson Ltd. The bank requires borrowers to keep compensating balance (b) on loans of 3% and there is 7% reserve requirement (RR). The bank also charges administration fees of 2.9% of the loan amount per annum. What is the contractually promised rate of return to the bank from the loan? (Instructions: Please round your answer to four decimal places. Please also keep your answer in decimals not percentage terms. e.g. if the answer is 8.157%, enter 0.0816) Answer:Come and Go Bank offers your firm a discount Interest loan with an interest rate of 10 percent for up to $26 million, and in addition requires you to maintain a 2 percent compensating balance against the face amount borrowed. What is the effective annual interest rate on this lending arrangement? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.32.16.)Cerise Company would record a note payable of_____, if the terms of the loan with a bank are as follows: Cersie Company would have to make one $102,000 payment in two years. Assume the market interest rate is 10% per year and the company rounds to the nearest dollar. (The present value of $1 for two periods at 10% is 0.82645). a.) $94,498 b.) $84,298 c.) $10,200 d.) $74,098