Problemcome and go bank offers your firm a discount, Ask an Expert

Finance

Problem:

Come and Go Bank offers your firm a discount interest loan at 5 percent for up to $31 million, and in addition requires you to maintain a 3 percent compensating balance against the amount borrowed.

Question: What is the effective annual interest rate on this lending arrangement? Please provide all computation and formulas.

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Category:- Basic Finance
Reference No.:- M91145859

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