Palm Beach Yachts Has a Line of Credit with a Local

question 31

Multiple Choice

Palm Beach Yachts has a line of credit with a local bank that permits it to borrow up to $1.8 million at any time.The interest rate is .78 percent per month.The bank charges compound interest and also requires that 5 percent of the amount borrowed be deposited into a non-interest-bearing account.What is the effective annual interest rate on this loan?

• A)10.68 percent
• B)10.43 percent
• C)9.74 percent
• D)10.29 percent
• E)9.91 percent

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