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A financial company is going to borrow $4 million for 4 months. The company has three options: A. a commercial bank offering a 6% annual
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A financial company is going to borrow $4 million for 4 months. The company has three options: A. a commercial bank offering a 6% annual rate loan; B. an insurance firm can provide a 5.7% annual rate discount loan and C. a brokerage can provide a 4.8% annual rate loan with 15% compensation balance.
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What is the effective annual rate for each option assume that the company has no any deposit in each organization?
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Which option should the company use to borrow money?
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