MNO,Incpaid a Total Interest of $3,000 on Its Line of Credit

question 14

Multiple Choice

MNO,Inc.paid a total interest of $3,000 on its line of credit borrowings for the year.MNO's average annual borrowings are $30,000.The bank retains $6,000 as a compensating balance.What is the MNO's annual effective rate of interest?

• A)8.33%
• B)10.00%
• C)12.50%
• D)30.00%

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