Cost of Bank Loans

Gifts Galore Inc. borrowed $$2$ million from National City Bank. The loan was made at a simple annual interest rate of $10\%$ a year for $3$ months. A $20\%$ compensating balance requirement raised the effective interest rate. Do not round intermediate calculations. Round your answers to two decimal places.

a$.$ The nominal annual rate on the loan was $11\mathrm{.}25\%.$ What is the true effective rate?

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b$.$ What would be the effective cost of the loan if the note required discount interest?

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c$.$ What would be the nominal annual interest rate on the loan if the bank did not require a compensating balance but required repayment in three equal monthly installments?

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