MR Consulting recently borrowed from its bank

using a 45-day discount interest loan that has a

quoted interest equal to 10 percent. The loan requires

MR to maintain a compensating balance

equal to 20 percent of the amount borrowed.

Prior to getting the loan, MR tried to maintain a

checking account balance close to zero. (a) How

much did MR borrow so that it was able pay

$86,625 in bills that were due at the time the

money was borrowed? (b) Compute the loan’s

APR and rEAR.