Homework answers / question archive / A XYZ bank lends a firm $5,000,000 for one year at 12 percent on a discounted basis and requires compensating balances of 10 percent of the face value of the loan

A XYZ bank lends a firm $5,000,000 for one year at 12 percent on a discounted basis and requires compensating balances of 10 percent of the face value of the loan

Finance

Share With

A XYZ bank lends a firm $5,000,000 for one year at 12 percent on a discounted basis and requires compensating balances of 10 percent of the face value of the loan. The effective annual interest rate associated with this loan is __________.

A. 6.67 %

B. 7.69%

C. 6.41%