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Question
Use the following information to answer the following question(s).ABC, Inc. requires $270,000 in short-term credit and is currently arranging a loan with its bank. ABC plans to use the funds for six months, the annual rate on the loan is 12%, and the bank will require a 10% compensating balance.
A firm will borrow $1 million for six months on a discount basis. The annual interest rate on the loan is 12%. What is the annual percentage cost of the loan?
A) 11.00%
B) 12.77%
C) 13.00%
D) 14.23%
Answer
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Related questions
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