Explore BrainMass

Explore BrainMass

    Financing foreign operations - effective percentage cost

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Apex Supplies borrows £1 million at 12 percent, payable in one year. If Apex is required to maintain a compensating balance of 20 percent, what is the effective percentage cost of its loan (in pounds)?

    © BrainMass Inc. brainmass.com March 4, 2021, 6:16 pm ad1c9bdddf
    https://brainmass.com/business/finance/financing-foreign-operations-effective-percentage-cost-37463

    Solution Preview

    Compensating Balances are non-interest-bearing demand deposits maintained by a firm to compensate a bank for services provided, credit lines, or ...

    Solution Summary

    The solution explains how to calculate the effective percenatge cost with compensating balance

    $2.49

    ADVERTISEMENT