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Alexeev081 [22]
2 years ago
10

The York Company has arranged a line of credit that allows it to borrow up to $64 milion at any time. The interest rate is .640

percent per month. Additionally, the company must deposit 6 percent of the amount borrowed in a non-interest bearing account. The bank uses compound interest on its line-of-credit loans. What is the effective annual rate on this line of credit?
Business
1 answer:
klio [65]2 years ago
7 0

Answer:

8.46%

Explanation:

Monthly interest rate = 0.640%

Number of month in year = 12

Investment in non-interest bearing = 6%

Effective annual interest = [(1 + Monthly interest rate)^Number of month] - 1 / (1 - Investment in Non-interest)

Effective annual interest = [(1 + 0.640%)^12] - 1 / (1 - 6%)

Effective annual interest = (1.0064)^12 - 1 / 0.94

Effective annual interest = 1.07956187072 - 1 / 0.94

Effective annual interest = 0.07956187072 / 0.94

Effective annual interest = 0.084640288

Effective annual interest = 8.46%

Hence, the Effective annual is 8.46%.

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This is because of the quantity theory of money.

According to the quantity theory of money, if the amount of money in the economy gets doubles, keeping all other things equal, price levels will also  gets double.

This means that the consumer will have to pay twice as much for the same amount of goods and services. This increase in price levels will eventually result in a rise of inflation level.

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Answer:

The correct answer is:  taxes and government spending.

Explanation:

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It can increase the allocation of public goods by using these tax earnings to spend on public goods through government spending. In this way, the government can reach the efficient allocation of resources.

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3 years ago
All of the following are disadvantages of using the average rate of return except:____________.
ad-work [718]

Answer:

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the average rate of return method does not consider the timing of the expected cash flows. or use present values unlike the net present value and internal rate of return.

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5 0
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Answer:

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