Purchase Solution

Effective rate of interest

Not what you're looking for?

Ask Custom Question

Capone Child Care Centers, Inc., plans to borrow $250,000 for one year at 10 percent from the Chicago Bank and Trust Company. There is a 20 percent compensating balance requirement. Capone keeps minimum transaction
balances of $18,000 in the normal course of business. This idle cash counts toward meeting the compensating balance requirement. What is the effective rate of interest?

Purchase this Solution
Solution Summary

The solution shows the steps to compute the rate of interest.

Purchase this Solution
Free BrainMass Quizzes
IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Basics of corporate finance

These questions will test you on your knowledge of finance.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

View More Free Quizzes
Related BrainMass Solutions

  • Calculating effective and nominal interest rates

    What is the effective interest rate if nominal annual interest is 14.8% computed monthly? Number of compounding=m=12 Nominal rate of interest=r=14.8% Effective rate of interest=(1+(r/n))^n-1=(1+(14.8%/12))^12-1=15.846% 2.

  • Distinguish Between Stated Rate and Effective Rate

    STATED (NOMINAL) AND EFFECTIVE RATES OF INTEREST Stated interest rate is also called nominal interest rate which is a rate of interest quoted for a year that has not been adjusted for frequency of compounding.

  • Effective Financing Rate of Canadian Dollar and Swiss Franc

    Esstimated change in Swiss franc = 3.0000% (1+Effective interest rate) =(1+ Swiss franc interest rate) x (1+ change in spot rate of Swiss franc) or Effective interest rate ={(1+ Swiss Franc interest

  • Your bank will lend you $4,000 for 45 days at a cost of $50 interest. What is your effective rate of interest?

    Your bank will lend you $4,000 for 45 days at a cost of $50 interest. What is your effective rate of interest? Effective Rate of Interest = (1+50/4000)^(365/45)-1 = 10.60% 16.

  • Multiple choice

    d. maturity value of the bonds multiplied by the effective interest rate. 2. a. plus the present value of all future interest payments using the market (effective) rate of interest. 3. c. seven months.

  • Interest cost and effective interest rate

    Total Dollar Interest Cost Loan 1st 30 Days Last 30-Days Total Interest Cost $200,000.00 g. Effective 60-Day rate of Interest Total Interest Cost Loan Effective 60-Day Rate $200,000.00 h.

  • Effective interest rate

    222450 Effective interest rate. What is the effective interest rate for each of the following payment plans, if someone borrows $4,000 at $500 interest for one year? 1. Annual payment 2. Semiannual payments 3. Quarterly payments 4.

  • Effective rate under different terms

    364318 Effective rate under different terms Your company plans to borrow $5 million for 12 months, and your banker gives you a stated rate of 14% interest. You would like to know the effective rate of interest for te following types of loans.

  • International Finance: Effective financing rate

    (1+Effective interest rate) =(1+ NewZealand interest rate) x (1- depreciation of NZ$) or Effective interest rate ={(1+ NewZealand interest rate) x (1- depreciation of NZ$)}-1 NewZealand interest rate= 6.50%

  • Financial Accounting :MCQ

    a) the present value of the principle amount at the market (effective) rate of interest plus the present value of all future interest payments at the market (effective) rate of interest b) the present value of its principal amount at the market (effective

View More Related Solutions