As the owner of Mountain Sports, you have approached your bank about a one year loan for your ski and mountain bike rental business. The business needs $20,000 and the bank has offered to make the loan with the following conditions: (1) the bank will charge 5% discount interest and (2) the bank requires a 15% compensating balance. How much do you have to actually borrow from the bank to have $20,000 of usable funds? Note: This is a Web Appendix 15B topic.

Group of answer choices

$25,000

$22,500

$23,750

$21,000