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B. A financial institution made a $3,000,000, 1-year discount loan at 11% interest, requiring a compensating balance equal to 8% of the face value of

B. A financial institution made a $3,000,000, 1-year discount loan at 11% interest, requiring a compensating balance equal to 8% of the face value of the loan. Determine the effective annual rate associated with this loan.

(Note assume that the firm currently maintains $0 on deposit in the financial institution.)

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