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Jumbo Enterprises plans to borrow R1 000 000 for one year. The stated interest rate is...

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Finance

Jumbo Enterprises plans to borrow R1 000 000 for one year. Thestated interest rate is 15% per annum.

Required:

Use the information provided above to calculate the effectiveinterest rate if:

4.3.1 The interest is discounted

4.3.2 There is a 25% compensating balance requirement

Answer & Explanation Solved by verified expert
4.0 Ratings (773 Votes)
Required amount to be borrowed 1000000 standard interest rate 15 Discounted factor 15 for 1 year 1 1 151 1 1 0151 1 115 08696 0870 Discounted factor 15 for 1 year 0870 Case 1 Effective interest rate if the interest is discounted    See Answer
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