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A company received a P500,000 line of credit from its bank. Some information about the credit line are shown as follows: stated interest rate -

A company received a P500,000 line of credit from its bank. Some information about the credit line are shown as follows: stated interest rate - 12%; compensating balance - 15%. Assuming that the company drew down the entire amount at the beginning of the year, and that the loan is discounted, what is the effective interest rate on the loan?

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