A company needs to increase its working capital to 400,000 riyals, the Chief Financial Officer (CFO) decides to Get a 1-year short-term loan from the bank at an interest rate of 6%, note that is required to keep 20% as a compensating balance. Find the effective interest rate of this type of financing. 6.2% 7.5% 8.8% 9.5% none of the above