Cray Computing needs a 5-month loan for $300,000. Its bank quotes a simple interest rate of 15% on the loan.     What is the effective annual rate (EAR)? What is the period rate if there is a compensating balance requirement of 20% of the loan amount

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 14P
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Cray Computing needs a 5-month loan for $300,000. Its bank quotes a simple interest rate of 15% on the loan.  

 

What is the effective annual rate (EAR)?

What is the period rate if there is a compensating balance requirement of 20% of the loan amount

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