Checkpoint 3 Calculating APR for a Line of Credit M&M Beverage Company has a $300,000 line of credit that requires a compensating balance equal to 10 percent of the loan amount. The rate paid on the loan is 12 percent per annum, $200,000 is borrowed for a six-month period, and the firm does not currently have a deposit with the lending bank. The dollar cost of the loan includes the interest expense as well as the opportunity cost of maintaining an idle cash balance in the compensating balance (10% of the loan). To accommodate the cost of the compensating balance requirement, assume that the added funds will have to be borrowed and simply left idle in the firm's checking account. 1.What is the annual rate on this loan if there was no compensating balance requirement? 2.What is the annual rate on this loan with compensating balance requirement? 3.What is the annual rate on this loan if there was no compensating balance requirement but the bank requires firm to pay intrest rat in advance? 4.What is the annual rate on this loan with compensating balance requirement and the bank also requires firm to pay interst rate in advance