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Sask Seed Wishes to Borrow $3 Million for Two Months

Question 98

Multiple Choice

Sask Seed wishes to borrow $3 million for two months.Using its inventory as collateral,it can obtain a 9% (APR) loan.The lender requires that a warehouse arrangement be used,with a warehouse fee of $9,000,payable at the end of the month.What is the firm's EAR for this loan?


A) 17.4%
B) 21.6%
C) 11.3%
D) 9.3%
E) 9%

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