A12. (Cost of bank loan) A bank loan agreement calls for an interest rate equal to prime rate plus 1%.A12. (Cost of bank loan)Individual assignment: Text Problem SetCorporate Financial Management (3rd Edition)Emery Douglas R. Finnerty John D. & Stowe John D. (2007) A12. (Cost of bank loan)
A bank loan agreement calls for an interest rate equal to prime rate
plus 1%. If prime rate averages 9% and non-interest-earning compensating
balances equal to 10% of the loan must be maintained what are the APR
and the APY of the loan assuming annual payments?