Let assume that CBA bank has approved you a line of credit of $85,000 with the required compensating balance of 10% and interest rate of 7%. If you need $60,000 for manufacturing products, what is your effective cost of borrowing?

Select one:

a.

13.33%

b.

17.33%

c.

5.33%

d.

6.33%

e.

7.78%

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