$($LOS$-2)$ Carey Company is borrowing $$200,000$ for one year at $12$ percent from Second Intrastate Bank. The bank requires a $20$

percent compensating balance. What is the effective rate of interest? What would the effective rate be if Carey were required to make

$12$ equal monthly payments to retire the loan? The principal, as used in Formula $8-6,$ refers to funds the firm can utilize effectively

$($Amount borrowed $-$ Compensating balance$).$