State Federal Bank $($SFB$)$ offers two borrowing options to businesses: $(1)$ a simple interest loan with a $10$ percent interest rate and no compensating balance and $(2)$ a discount interest loan with

a quoted rate equal to $8$ percent that requires a $15$ percent compensating balance. If a firm needs a six$-$month loan, which option should it choose based on $r_{\text{E}\text{A}\text{R}}?$ Assume the firm normally

maintains a negligible checking account balance at the bank. Assume there are $360$ days in a year. Do not round intermediate calculations. Round your answers to two decimal places.

Based on $r_{\text{E}\text{A}\text{R}\text{,}},$ should be chosen.