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Posted on May 18, 2024

Cheap Money Bank offers your firm a discount interest loan with an interest rate of 1 0 percent for up to $ 1 5 million,

Cheap Money Bank offers your firm a discount interest loan with an interest rate of

10

percent for up to $

15

million, and in addition requires you to maintain a

1

percent compensating balance against the face amount borrowed. What is the effective annual interest rate on this lending arrangement?

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