Effective annual rate of interest on the line of credit


Jackson Industries has borrowed $125,000 under a line-of-credit agreement. While the company normally maintains a checking account balance of $15,000 in the lending bank, this credit line requires a 20% compensating balance. The stated interest rate on the borrowed funds is 10%. What is the effective annual rate of interest on the line of credit?

Request for Solution File

Ask an Expert for Answer!!
Accounting Basics: Effective annual rate of interest on the line of credit
Reference No:- TGS068793

Expected delivery within 24 Hours