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3. Golden Co. borrowed $900,000 from Citi bank at a stated interest rate of 5%. In addition, Citi bank required a compensating balance of 20%.

3. Golden Co. borrowed $900,000 from Citi bank at a stated interest rate of 5%. In addition, Citi bank required a compensating balance of 20%. What is the effective cost of the borrowing? A. 4% B. 5% C. 6% D. 6.25%

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