Suppose your firm is seeking a three-year, amortizing $400,000 loan with annual payments, and your bank is offering you the chois between a loan of $415,000 with a compensating balance of $15,000 and a loan of $400,000 without a compensating balance. The interest rate on the $400,000 loan is 9.5 percent. How low would the interest rate on the loan with the compensating balance have to be for you to choose it? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Interest rate 8.73 %
Suppose your firm is seeking a three-year, amortizing $400,000 loan with annual payments, and your bank is offering you the chois between a loan of $415,000 with a compensating balance of $15,000 and a loan of $400,000 without a compensating balance. The interest rate on the $400,000 loan is 9.5 percent. How low would the interest rate on the loan with the compensating balance have to be for you to choose it? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Interest rate 8.73 %
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 14P
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Question
![Suppose your firm is seeking a three-year, amortizing $400,000 loan with annual payments, and your bank is offering you the choice
between a loan of $415,000 with a compensating balance of $15,000 and a loan of $400,000 without a compensating balance. The
interest rate on the $400,000 loan is 9.5 percent.
How low would the interest rate on the loan with the compensating balance have to be for you to choose it? (Do not round
intermediate calculations. Round your final answer to 2 decimal places.)
Interest rate
8.73 %](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc2e99bea-40b4-4871-b1c7-d768a8898c09%2Fd996d6d2-3eb3-455b-9113-d98223222bc3%2Fplmq1bl_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose your firm is seeking a three-year, amortizing $400,000 loan with annual payments, and your bank is offering you the choice
between a loan of $415,000 with a compensating balance of $15,000 and a loan of $400,000 without a compensating balance. The
interest rate on the $400,000 loan is 9.5 percent.
How low would the interest rate on the loan with the compensating balance have to be for you to choose it? (Do not round
intermediate calculations. Round your final answer to 2 decimal places.)
Interest rate
8.73 %
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