Question

Yoo, Inc., has arranged a line of credit that allows it to borrow up to $48 million at any time. The interest rate is 624 percent per month. Additionally, the company must deposit 6 percent of the amount borrowed in a non-interest bearing account. The bank uses compound interest on its line of credit loans. If the company needs $24 million for 5 months, how much will it pay in interest? Muriple Choice O $750,203 52 $750,2030 O $5,20352 Oo oo $19.22165

Answer 1

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W © v aux 3 ENG 06:10 20-03-2020 ... o X Q90 L M N O P Q Rs U V W X Y A 69 70 71 72 73 INTEREST RATE = 0.624% PER MONTH 74 75 INTEREST IS COMPOUND INTEREST 76 77 78 AMOUNT BORROWED = 24000000 FOR 5 MONTHS BUT 6% IS TO BE KEPT AS COMPENSATING BALANCE 19 SO AMOUNT TO BE BORROWED = 24000000/(1-0.06) 25531914.89 81 82 83 84 INTEREST PAYABLE = INTEREST PAYABLE = ANSWER INTEREST PAYABLE = PV*(1+r)^n - PV 25531914.89 X (1+0.00624)^5 - 25531914.89 806599.49 87 88 89 ... cash opti LINE OF CREDIT Sheet5 eoq miller CARD BANKER ACCEPTANC FACTOR SI DISC FOCAL WC REQUIRE Sheet3 Sheet4 = 1