Bernhard is CFO of Langer, Inc. and will be borrowing $800,000 for one year from the Living Well Bank. The bank will discount the loan and require a 15% compensating balance. Langer Inc. has been offered a nominal interest rate of 9.50%. What is the firm's effective annual rate of interest for this loan?

Select one:

A. 9.50%

B. 10.50%

C. 11.18%

D. 12.58%

Hideki is the CFO of Matsuyama Inc. and is considering a loan. The loan is a discounted loan and also requires a compensating balance of 5%. Hideki is trying to calculate the effective annual rate of interest on this loan if he would borrow $300,000 for one year at 7.00% interest. What is the answer?

Select one:

A. 7.00%

B. 7.37%

C. 7.53%

D. 7.96%