4. (Compensating Balance) Quick Loan Bank offers your firm a line of credit at 8.25% annually up to $25 million. In addition, the bank requires you to maintain a 5% compensating balance against the amount you borrowed. What is the effective interest rate on this line of credit

9.51%

Explanation:

In this question, we are interested in calculating the effective interest rate on this line of credit

Firstly, we calculate the interest value = 8.25% * 25 million = 2,062,500

Next is to calculate the compensating balance = 5% of 25 million = 1,250,000

Mathematically;

Effective interest rate = interest/(loan - interest - compensating balance)

Effective Interest rate = 2062500/(25000000-1250000-2062500)) = 0.0951

= 9.51%

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

answer; microeconomics;