APR and rEAR
Montana Allied Products (MAP) must borrow $5.1 million to finance its working capital requirements. The bank has offered a 45-day simple interest loan with a quoted interest rate of 8 percent. Calculate the loan’s APR and rEAR assuming there is (a) no compensating balance requirement and (b) a 15 percent compensating balance requirement, which MAP must satisfy from the loan proceeds.
APR and rEAR