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Question: You are considering borrowing 1 million SEK for one month at an APR of 12%. The bank will require a (no-interest) compensating balance of 6% of the face value of the loan and will charge a 6000 SEK loan origination fee.

(a) Which total amount you must borrow to cover both the loan origination fee and the compensating balance requirement?

The total amount is_________ SEK. (round to SEK, no decimals)

(b) What is the interest expense (including the origination fee) for the one-month loan?

The interest expense is_________ SEK. (round to SEK, no decimals)

The EAR is_________ %. (round to two decimals)

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Basic Finance, Finance

Category:- Basic Finance
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