On July 1, Dichter Company obtained a $2,000,000, 180-day bank loan at an annual rate of 12%. The loan agreement requires Dichter to maintain a $400,000 compensating balance in its checking account at the lending bank. Dichter would otherwise maintain a balance of only $200,000 in this account. The checking account earns interest at an annual rate of 6%. Based on a 360-day year, the effective interest rate on the borrowing is

The annual effective  interest rate based on a 360 day period is 12.67%

Explanation:

The effective interest rate for a 180 day borrowing period is the ratio of net interest cost  to net available proceeds.

The net interest cost = the gross interest cost -  the incremental interest revenue.

The gross interest cost =  $2,000,000 × 12% × (6  months ÷ 12 months) = $2,000,000 × 0.12 × 0.5 = $120,000

the incremental interest revenue =  $200,000 × 6% ×  (6 months ÷ 12 months) = $200,000 × 0.06 ×  0.5= $6,000

Since the net interest cost = the gross interest cost -  the incremental interest revenue

Net interest cost =  $120,000 - $6,000 = $114,000

net available proceeds = $2000000 - $200000 = $1800000

Therefore, the  effective interest rate based om a 180 day period = net interest cost/net available proceeds = $114,000 / $1,800,000 = 0.0633 = 6.33%

The annual effective  interest rate based on a 360 day period = 6.33% × 2 = 12.67%

answer; ///(d); determining who competes most closely   with whom evaluating whether industry driving forces and competitive pressure favor some strategic groups and hurt others, and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each groups respective market positions;