A bank offers your firm a revolving credit arrangement for up to $74 million at an interest rate of 1.85% per quarter. The bank also requires you to maintain a compensating balance of 4% against the unused portion of the credit line, to be deposited in a non-interest-bearing account. Assume you have a short-term investment account at the bank that pays 1.20% per quarter, and assume that the bank uses compound interest on its revolving credit loans. (Do not round intermediate calculations. Round the final answers to 2 decimal places.)

What is your effective annual interest rate on the lending arrangement if you borrow $40 million immediately and repay it in one year?

Effective annual interest rate %

What is your effective annual interest rate if you borrow $74 million immediately and repay it in one year?

Effective annual interest rate