Doors Inc has arranged a revolving credit agreement for up to $62 million at an interest rate of 1.31 percent per quarter. The agreement also requires Doors Inc to maintain a compensating balance of 4 percent of the unused portion of the credit line, to be deposited in a non-interest bearing account. Doors Inc's short-term investment account at the same bank pays an interest rate of .45 per quarter. What is the effective annual interest rate if Doors Inc borrows $27 million for one year?

Multiple Choice

• 5.98%

• 6.84%

• 5.86%

• 5.44%

• 5.34%

Doors Inc has arranged a revolving credit agreement for up to $62 million at an interest rate of 1.31 percent per quarter. The agreement also requires Doors Inc to maintain a compensating balance of 4 percent of the unused portion of the credit line, to be deposited in a non-interest bearing account. Doors Inc's short-term investment account at the same bank pays an interest rate of .45 per quarter. What is the effective annual interest rate if Doors Inc borrows $27 million for one year? Multiple Choice 5.98% 6.84% 5.86% 5.44% 5.34%