The Effective Annual Interest Rate on a Loan in Which

question 93

Multiple Choice

The effective annual interest rate on a loan in which a company borrows $1000,000 for one year at 8 percent and requires a compensating balance of 10 percent is:

• A)7.5%
• B)8.5%
• C)8.9%
• D)7.9%
• E)none of the above

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