COMPENSATING BALANCES AND EFFECTIVE ANNUAL RATES Lincoln Industries has a line of credit at Bank Two that requires it to pay 11% interest on its borrowing and to maintain a compensating balance equal to 15% of the amount borrowed. The firm has borrowed $800,000 during the year under the agreement. Calculate the effective annual rate on the firm's borrowing in each of the following circumstances: a) The firm normally maintains no deposit balances at Bank Two. b) The firm normally maintains $70,000 in deposit balances at Bank Two. c) The firm normally maintains $150,000 in deposit balances at Bank Two. d) Compare, contrast, and discuss your findings in parts a, b, and c