Compensating balance versus discount loan Weathers Catering Supply, inc., needs to bonow $155,000 for 6 months. State Bank has offered to lend the funds at an annual rate of 8.7% subject to a 10.3% compensating balance. (Note: Weathen currensy maintains $0 on deposit in State Bank) Frost Finance Ca. has offered to lend tho funds at an annual rate of 8.7% with discount-toan terms. The principal of both loans would be payable at maturity as a single sum. a. Calculate the effective annual rate of intervat on each loan. b. What could Weathers do that would reduce the effective annual rate on the State Bark loan? a. State Bark's semi-annual rate is 16. (Round to two decimal places.) State Bank's efective annuat rate is \% (Round to two decimat ptaces) Frost Finance's serv-annual rate is \%. (Round to two decimal places.) Frost Finance's effective annuat rate is N. (Round to two decimal places) b. What could Weathers do that would reduce the eflective annual rate on the State Bank loan? TI Weathers became a regular customer of State Bank and kept is normal deposts at the bank, then the additional deposit required for the compensating balance would be reduced and the co: would be lowered:" Is the above statement true or talse? (Select from the drop-down menu.)