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Paymaster Enterprises has arranged to finance its seasonal? working-capital needs with a? short-term bank loan. The...

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Finance

Paymaster Enterprises has arranged to finance its seasonal?working-capital needs with a? short-term bank loan. The loan willcarry a rate of 12 percent per annum with interest paid in advance?(discounted). In? addition, Paymaster must maintain a minimumdemand deposit with the bank of 10 percent of the loan balancethroughout the term of the loan. If Paymaster plans to borrow?$110,000 for a period of 5 ?months, what is the annualized cost ofthe bank? loan?

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