Refer to the information provided in Problem 14-18. Suppose PDQ needs $90,000 today to pay past due bills. How much must PDQ borrow for each loan so that it has $90,000 available to pay the bills? Show how much of the total amount borrowed PDQ will actually be able to use.

Data from 14-18

PDQ Enterprise can borrow from its bank using a one-year 

(a) Simple interest loan with a 12 percent quoted rate and no compensating balance 

(b) A discount interest loan with a quoted rate equal to 10 percent that requires a 15 percent compensating balance. What is the EAR of the lower-cost loan? PDQ normally tries to keep its checking account balance close to $0.