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suppose you borrow $2,000 from a bank for 1 year at a stated annual interest rate of 14%, with interest prepaid (a discounted loan). Also,
suppose you borrow $2,000 from a bank for 1 year at a stated annual interest rate of 14%, with interest prepaid (a discounted loan). Also, assume that the bank requires you to maintain a compensating balance equal to 20% of the initial loan value. What effective annual interest rate are you being charged? How much must you actually borrow from the bank to have $2,000 of usable funds?
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