# You are required to hold a com

You are required to hold a compensating balance on a loan of 15%. You will borrow money today, and 1 year from today, you will make a single interest payment and pay off the balance of the loan. (It is an annual loan with annual compounding.) You need \$3,300,000 In order to fund a project. The APR (annual percentage rate) on the loan is 13%. In your calculations, round dollar amounts to the nearest penny, and carry interest rates out four decimal places.

In order to ensure that you get the funds you need, the principal on the loan will have to be

A. 2,805,000 00

B. 3,729,000.00

C. 3,793,103.45

D. 3,795,000.00

E. 3,882,352.94

F. 4,244,923.91

G. 4,801,398.29

The cash flow of the loan that is available to you at T = O is

A. 2,805,000,00

B. 3,300,000.00

C. 3,729,000.00

D. 3,793,103.45

E. 3,795,000.00

F. 4,244,923.91

G. 4,801,398.29

The cash flow of the loan at T = 1 is

A. -2,795,294.12

B. -2,805,000.00

C. -3,300,000.00

D. -3,598,240.24

E. -3,804,705.88

F. -3,882,352.94

G. -4,387,058.82

The EAR of the loan is

A. .0904

B. .1300

C. .1529

D. .1699

E. .1765

F. .1833

G. .3294

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