Compensating balance versus discount loan Weathers Catering Supply, Inc., needs to borrow $147,000 for 6 months. State Bank has offered to lend the funds at an annual rate of 8.9% subject o a 9.7\% 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 erms. The principal of both loans would be payable at maturity as a single sum. . Calculate the effective annual rate of interest on o. What could Weathers do that would reduce the effective annual rate on the State Bank loan