Fin419 Principles of Managerial Finance: Problem 15–9 Effective Annual Rate
Fin419 Principles of Managerial Finance
Problem 15–9 Effective Annual Rate A financial institution made a $10,000, 1-year loan at 10% interest, requiring a compensating balance equal to 20% of the face value of the loan. Determine the effective annual rate associated with this loan. Note: Assume that the firm currently maintains $0 on deposit in the financial institution.