Homework Answers
| Annual rate of interest | |||
| = | Interest | X | Days in the year (360) |
| Principal -Compensation balance | Days loan is outstanding | ||
| $2000 | |||
| = | 38000x0.14x 180/365 | X | 365 |
| 38000 -(7600-3300)* | 180 | ||
| = | 0.1579 or 15.79% | ||
| * required compensation balance - minimum balance on chequing account = Additional funds needed at bank | |||
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The treasurer of Brandon Blue Sox is seeking a $38,000 loan for 180 days from the...
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The treasurer of Brandon Blue Sox is seeking a $35,000 loan for 180 days from the Brandon Credit Union. The stated interest rate is 12 percent and there is a 15 percent compensating balance requirement. The treasurer always keeps a minimum of $3,000 in the firm's chequing account. These funds could count toward meeting any compensating balance requirements. What is the annual rate of interest on this loan? (Use 365 days in a year. Do not round intermediate calculations. Round...
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