The Jetson Co

question 38

Multiple Choice

The Jetson Co.has an $80,000 line of credit with a 12% interest rate and a 10% compensating balance requirement that is based on the total amount borrowed.What is the effective annual interest rate if the firm needs $45,000 of cash for one year?

• A)10.80%
• B)11.44%
• C)12.12%
• D)13.33%
• E)13.78%

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