Analog Computers Needs to Borrow $475,000 from the Midland Bank

question 3

Multiple Choice

Analog Computers needs to borrow $475,000 from the Midland Bank. The bank requires a 15% compensating balance. How much money will Analog need to borrow in order to end up with $475,000 spendable cash?

• A) $546,250
• B) $758,264
• C) $558,824
• D) $71,250

Convert annual interest rates to monthly rates.

Calculate simple interest on a monthly basis.

Compute net balances, finance charges, and new balances under various credit terms.

Complete loan amortization schedules and solve effective rate problems.

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