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A firm takes out a $50,000 loan at 9% interest for 3 months. The compensating balance requirement is 20%. How much interest will be paid

A firm takes out a $50,000 loan at 9% interest for 3 months. The compensating balance requirement is 20%. How much interest will be paid on this loan?

$1,406.25

2.81%

$5,625

$1,405

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