Refer to the information provided in Problem

16–8. To borrow the funds it needs, MAP had

to agree to a simple interest loan that required

a 15 percent compensating balance. Suppose

that MAP needs $5.1 million to pay bills that are

currently due. (a) If it does not normally maintain

a cash balance at the bank, how much must

MAP borrow? (b) If it normally maintains a cash
$500,000 balance at the bank, how much must
MAP borrow? In this case, what is the loan’s APR
and rEAR?