What is the effective rate of interest


Ohlin, Meade, and Assoc. plans to borrow $1 million for 12 months. Citibank gives the firm a stated rate of 10 percent interest. 

What is the effective rate of interest if the loan carries a simple 10 percent interest with a 20 percent compensating balance? 

What is the effective rate of interest if the bank uses a discounted loan? 

What is the effective rate of interest if the loan is an installment loan with 12 payments? 

What is the effective rate of interest if the loan is a discounted loan with a 5 percent compensating balance? 

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