Business Book Publishing Needs to Borrow $800,000 in Order to Finance

question 27

Essay

Business Book Publishing needs to borrow $800,000 in order to finance its new inventory. Two banks they were considering offered different annual loan terms: Marine Bank offered a 7% loan with a 15% compensating balance to be paid back in quarterly payments. McLean National Bank offered Business Book Publishing an 8.25% loan to be paid back semi-annually. Which loan terms should Business Book Publishing take?

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