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A company obtained a short-term bank loan of $500,000 at an annual interest rate of eight percent. As a condition of the loan, the company is required to maintain a compensating balance of $100,000 in its checking account. The checking account earns interest at an annual rate of three percent. Ordinarily, the company maintains a balance of $50,000 in its account for transaction purposes. What is the effective interest rate of the loan?
Suggested Answer: D
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Choice 'd' is correct. 8.56%. To calculate the effective annualized percentage cost of financing:
Choices 'a', 'b', and 'c' are incorrect, per the above calculation.
10 comments · newest first
DU
Dudley
11 months ago
I thought it would be higher than that, honestly.
MA
Marge
12 months ago
Totally, that balance changes everything!
AN
Anthony
12 months ago
Wait, how does that affect the effective rate?
MI
Micaela
12 months ago
Don't forget the $100,000 compensating balance!
RE
Reiko
1 year ago
The loan is $500,000 at 8% interest.
TA
Tammara
1 year ago
I'm a bit confused by the output. I'll need to review my understanding of views and how they interact with base tables before I can confidently select an answer.
AR
Arleen
1 year ago
I've used the Inbound Shipment Management Tool before, so I think I know the main advantages. I'll select those.
EL
Eladia
1 year ago
This seems like a straightforward question about the purpose of information classification. I'll carefully read through the options and select the one that best describes the objective.
LA
Lavelle
1 year ago
I remember practicing a similar question about I/O modules and how they connect to fabric interconnects, but this one has specific requirements that throw me off.
YO
Yoko
1 year ago
Okay, let me think this through step-by-step. The question is asking about the response code when the requested REST API information cannot be found, and the authenticated user is making the request. Based on that, I believe the correct answer is 404 - Not Found.