Effective annual interest rate

by | Sep 10, 2021 | Homework Help

Foods Galore has a line of credit of $250,000 with an interest rate of 1.75 percent per quarter. The credit line also requires that 1.5 percent of the unused portion of the credit line be deposited in a non-interest-bearing account as a compensating balance. Food Galore’s short-term investments are earning .45 percent per quarter. What is the effective annual interest rate on this arrangement if the line of credit goes unused all year? Assume any funds borrowed or invested use compound interest.

Plagiarism-free and delivered on time!

We are passionate about delivering quality essays.

Our writers know how to write on any topic and subject area while meeting all of your specific requirements.

Unlike most other services, we will do a free revision if you need us to make corrections even after delivery.