8-9 Mike can borrow $50,000 at 10 percent interest from a local bank What is th effective rate of interest under the following conditions? (a) The principal and interest are to be repaid at the end of one year, but the is a 20 percent compensating balance requirement. (b) The loan is discounted and the principal is repaid at the end of one vear (c) The loan principal and interest are to be paid back at the end of a year