Question

Your company plans to borrow $13 million for 12 months, and your banker gives you a stated rate of 19 percent

interest.

Calculate the effective rate of interest for the following types of loans.

a.	Simple 19 percent interest with a compensating balance of 14 percent. (Use a 360-day year. Input your answer as a percent rounded to 2 decimal places.)

Effective rate of interest

b.	Discounted interest (with no compensating balance). (Input your answer as percent rounded to 2 decimal places.)

Effective rate of interest

c.	An installment loan (12 payments). (Input your answer as a percent rounded to 2 decimal places.)

Effective rate of interest

d.	Discounted interest with a compensating balance of 7 percent. (Use a 360-day year. Input your answer as a percent rounded to 2 decimal places.)

Effective rate of interest

rate