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:

Stages

Stages refer to distinct phases or periods in the development or process of something, often used in contexts such as human development, project management, or historical progression.

Animals

Living organisms that feed, respire, move, reproduce, and grow but do not possess the cognitive capabilities of humans.

Experience Culture

The aspect of culture that is lived and transmitted through direct personal involvement and interaction within a community or environment.

Survival Skills

Techniques and knowledge necessary to live through dangerous situations or in hazardous environments.