Compensating balance versus discount loan Weathers Catering Supply, Inc., needs to borrow $ 154 comma 000 for 6 months. State Bank has offered to lend the funds at an annual rate of 8.9 % subject to a 10.4 % compensating balance.(Note: Weathers currently maintains $ 0 on deposit in State Bank.) Frost Finance Co. has offered to lend the funds at an annual rate of 8.9 % with discount-loan terms. The principal of both loans would be payable at maturity as a single sum. a.Calculate the effective annual rate of interest on each loan. b.What could Weathers do that would reduce the effective annual rate on the State Bank loan?