Effective annual rate of interest on the line of credit, Accounting Basics

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Effective annual rate of interest on the line of credit

Problem:

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%.

Required:

Question: What is the effective annual rate of interest on the line of credit?

Note: Show supporting computations in good form.

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Accounting Basics: Effective annual rate of interest on the line of credit

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Accounting Basics: Effective annual rate of interest on the line of credit

Reference No:- TGS0888288

Have a Question? (oR Write a Review)

Recent Questions Asked Accounting Basics

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Request for Solution File

Ask an Expert for Answer!!

Accounting Basics: Effective annual rate of interest on the line of credit

Reference No:- TGS0888288

Recent Questions Asked Accounting Basics

Q : Compute the market value of the bonds

Q : Why can the body feedback system not sense

Q : Appropriate required rate of return

Q : Project free cash flow

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