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The Gunnison Village Inn (GVI) borrowed short-term funds of $80,000 from the Western 574 Chapter 11 -Problem 8 Colorado Bank. The annual interest rate is
The Gunnison Village Inn (GVI) borrowed short-term funds of $80,000 from the Western 574 Chapter 11 -Problem 8 Colorado Bank. The annual interest rate is 10 percent. The bank requires GVI to have a compensating balance of $10,000 in its checking account. Required: 1. Assuming GVI historically has a zero cash bank balance, what is the effective interest 2. Assume GVI normally maintains $5,000 in its checking account, so only an additional $5,000 must be left in its checking account related to this loan. What is the effective rate of this loan? interest rate
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