Problem 16-13 Costs of Borrowing [LO3] You%u2019ve worked out a line of cre

Problem 16-13 Costs of Borrowing [LO3]

You%u2019ve worked out a line of credit arrangement that allows you to borrow up to $60 million at any time. The interest rate is 0.574
percent per month. In addition 5 percent of the amount that you borrow must be deposited in a noninterest-bearing account. Assume that
your bank uses compound interest on its line-of-credit loans.

What is the effective annual interest rate on this lending arrangement? (Do not include the percent sign
(%). Round your answer to 2 decimal places (e.g. 32.16).)

Suppose you need $15.20 million today and you repay it in seven months. How much interest will you pay? (Do
not include the dollar sign ($). Enter your answer in dollars not millions of dollars (e.g. 1234567). Round your answer to 2 decimal
places (e.g. 32.16).)