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Rickos Rickos
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6 years ago
Georgia Peaches Corporation (GPC) has a line of credit with Trust Company Bank that allows GPC to borrow up to $300,000 at an annual interest rate of 5.5%. However, GPC must keep a compensating balance of 20% of any amount borrowed on deposit at the Trust Company Bank. GPC does not normally have a cash balance account with the Trust Company. What is the effective annual cost of credit?
A) 6.875%
B) 6.975%
C) 7.075%
D) 7.775%
Textbook 
Financial Management: Principles and Applications

Financial Management: Principles and Applications


Edition: 13th
Authors:
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vanrheevanrhee
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Rickos Author
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6 years ago
You saved my grade for me. I can't thank you enough.
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