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Summit Record Company is negotiating with two banks for a $134,000 loan. Fidelity Bank requires a compensating balance of 18 percent, discounts the loan, and
Summit Record Company is negotiating with two banks for a $134,000 loan. Fidelity Bank requires a compensating balance of 18 percent, discounts the loan, and wants to be paid back in four quarterly payments. Southwest Bank requires a compensating balance of 9 percent, does not discount the loan, but wants to be paid back in 12 monthly installments. The stated rate for both banks is 12 percent. Compensating balances will be subtracted from the $134,000 in determining the available funds in part a
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