APR and APY
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A bank loan agreement calls for an interest rate equal to prime rate plus 1%. If prime rate averages 9% and non-interest-earning compensating balances equal to 10% of the loan must be maintained, what are the APR and the APY of the loan assuming annual payments?
With the information given, How do I find the APR and APY?
It seems that there is not enough information to find the APR and APY.
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The solution explains how to calculate APR and APY.
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The interest rate on loan is 9%+1%=10%
There is a compensating balance of 10%
Suppose we borrow $100, then ...
Purchase this Solution
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