Question

Assume that your bank uses compound interest on its line-of-credit loans.

a. what is the effective annual interest rate on this lending arrangement

Answer 1

The interest rate is .64 percent per month. In addition, 5 percent of the amount that you borrow must be deposited in a non-interest-bearing account. Assume that your bank uses compound interest on its line of credit loans. ... What is the effective annual interest rate on this lending arrangement

Answer 2

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The interest rate is .64 percent per month. In addition, 5 percent of the amount that you borrow must be deposited in a non-interest-bearing account. Assume that your bank uses compound interest on its line of credit loans. What is the effective annual interest rate on this lending arrangement