Multiple Choice
Assume that Ningbo Steel borrows $1,000,000 for one year under a line of credit with a stated interest rate of 7.5 percent and a 15 percent compensating balance and that the firm keeps no money on deposit in its checking account. Based on this information, the effective annual interest rate on the loan is
A) 8.8%.
B) 15.0%.
C) 22.5%.
D) 8.2%.
E) none of the above
Correct Answer:
Verified
Correct Answer:
Verified
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