Assignment:
The Baxter, Inc. borrowed $100,000 for six months from the bank. The rate is prime plus 2 percent. The prime rate was 8.5 percent at the beginning of the loan and changed to 9 percent after two months. This was the only change. How much interest must The Jackson Corporation pay? What is the effective annual rate?
Provide complete and step by step solution for the question and show calculations and use formulas.