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Bank A offers loans with a 10 percent stated annua...

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Bank A offers loans with a 10 percent stated annual rate and a 10 percent compensating balance. You wish to obtain $250, 000 in a six month loan. a. How much must you borrow to obtain $250,000 in usable funds? Assume you currently do not have any funds on deposit at the bank. What is the effective annual rate on a six month loan? b. How much you borrow to obtain $250,000 in usable funds if you currently have $10,000 on deposit at the bank? What is the effective annual rate on a six-month loan? c. How much must you borrow to obtain $250,000 in usable funds if you currently have $30,000 on deposit at the bank? d. What is the effective annual rate on a six-month loan?

 

Paper#6968 | Written in 18-Jul-2015

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