Solved: Determine the discounted interest, Accounting Basics

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Determine the discounted interest

Response to the following problem:

A business plan to borrow $5 million for 12 months, and the bank gives you a stated 14 percent interest rate. What would be the effective rate interest for the following types of loans:

a. Simple 14 % interest with a 10% compensating balance?

b. Discounted interest?

c. Installment loan with 12 payments?

d. Discounted interest with a 5% compensating balance?

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Accounting Basics: Determine the discounted interest

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Accounting Basics: Determine the discounted interest

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