Problem: You've worked out a line of credit arrangement that allows you borrow up to $70M at any time. The interest rate is .480% per month. In addition , 5% of the amount that you borrow must be deposited in a non interest-bearing account.
Assume that your bank uses compound interest on its line of credit loans.
1) What is the effective annual interest rate on this lending arrangement?
2) Suppose you need $15M today and you repay it in six months - How much interest will you pay?