You've Worked Out a Line of Credit Arrangement That Allows

question 44

Multiple Choice

You've worked out a line of credit arrangement that allows you to borrow up to $50 million at any time.The interest rate is 0.5 percent per month.In addition,7 percent of the amount that you borrow must be deposited in a non-interest bearing account.Assume your bank uses compound interest on its line of credit loans.What is the effective annual interest rate on this lending arrangement?

• A)6.65 percent
• B)6.72 percent
• C)6.81 percent
• D)6.87 percent
• E)6.94 percent

---

Definitions:

Organisational Culture

The shared values, beliefs, norms, and practices that guide and shape the behavior of people within an organization.

Human Capital

Human capital represents the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value to an organization.

Internal Forces

Factors within an organization, such as employees' skills, corporate culture, and management policies, influencing its operations and performance.

Organisational Change

An ongoing process of altering an organization's strategies, structures, procedures, technologies, or culture to handle new challenges or opportunities.