Dunder Corporation has an existing loan in the amount of $8 million with an annual interest rate of 6.3%. The company provides an internal company-prepared financial statement to the bank under the loan agreement. Two competing banks have offered to replace Dunder Corporation's existing loan agreement with a new one. United National Bank has offered to loan Dunder $8 million at a rate of 5.5% but requires Dunder to provide financial statements that have been reviewed by a CPA firm. Green Back Bank has offered to loan Dunder $8 million at a rate of 4.6% but requires Dunder to provide financial statements that have been audited by a CPA firm. Dunder Corporation's controller approached a CPA firm and was given an estimated cost of $29,000 to perform a review and $59,000 to perform an audit. Read the (Enter amounts in dollars, not millions, throughout.) Requirement a. Explain why the interest rate for the loan that requires a review report is lower than that for the loan that does not require a review. Explain Why the interest rate for the loan that requires an audit report is lower than the interest rate for the other two loans. The interest rate for the loan that requires a review report is lower than the loan that does not require a review because of the information risk. A review report provides assurance to financial statement users. Compared to a review report, an audit provides assurance and thus information risk. As a result, the interest rate is for the Ioan with the audit report