Cost of Bank Loans Gifts Galore Inc. borrowed $1.65 million from National City Bank. The loan was made at a simple annual interest rate of 15% a year for 3 months. A 15% compensating balance requirement raised the effective interest rate. Do not round intermediate calculations. Round your answers to two decimal places. The nominal annual rate on the loan was 12.5%. What is the true effective rate? % What would be the effective cost of the loan if the note required discount interest? % What would be the nominal annual interest rate on the loan if the bank did not require a compensating balance but required repayment in three equal monthly installments? %

Cost of Bank Loans Gifts Galore Inc. borrowed $1.65 million from National City Bank. The loan was made at a simple annual interest rate of 15% a year for 3 months. A 15% compensating balance requirement raised the effective interest rate. Do not round intermediate calculations. Round your answers to two decimal places. The nominal annual rate on the loan was 12.5%. What is the true effective rate? % What would be the effective cost of the loan if the note required discount interest? % What would be the nominal annual interest rate on the loan if the bank did not require a compensating balance but required repayment in three equal monthly installments? %

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 4P: Gifts Galore Inc. borrowed 1.5 million from National City Bank. The loan was made at a simple annual...

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