Summit Record Company is negotiating with two banks for a $$168,000$ loan. Fidelity Bank requires a compensating balance of $18$ percent, discounts the loan, and wants to be paid back in four quarterly payments. Southwest Bank requires a compensating balance of $9$ percent, does not discount the loan, but wants to be paid back in $12$ monthly installments. The stated rate for both banks is $11$ percent. Compensating balances will be subtracted from the $$168,000$ in determining the available funds in part a$.$

a$-1.$ Calculate the effective interest rate for Fidelity Bank and Southwest Bank.

Note: Do not round intermediate calculations. Input your answers as a percent rounded to $2$ decimal places.

a$-2.$ Which loan should Summit accept?

multiple choice $1$

Southwest Bank

Fidelity Bank

b$.$ Recompute the effective cost of interest, assuming that Summit ordinarily maintains $$30,240$ at each bank in deposits that will serve as compensating balances.

Note: Do not round intermediate calculations. Input your answers as a percent rounded to $2$ decimal places.

c$.$ Does your choice of banks change if the assumption in part b is correct?

multiple choice $2$

Yes

No