You plan to borrow $$$$20,000$ from the bank to pay for inventories for a gift shop you have just opened. The bank offers to lend you the money at $11\%$ annual interest for the $6$ months the funds will be needed$($assume a$360-$day year$).$

a$.$Calculate the annualized rate of interest on the loan.

b$.$In$$ addition, the bank requires you to maintain a $16\%$ compensating balance in the bank. Because you are just opening your$$ business, you do not have a demand deposit account at the bank that can be used to meet the$$ compensating$-$balance requirement. This means that you will have to put $16$ percent of the loan amount$($which you had planned to use to help finance the$$ business$)$ in a checking account. What is the cost of the loan$$ now?

c$.$In addition to the$$ compensating$-$balance requirement in part b$,$ you are told that interest will be discounted. What is the annualized rate of interest on the loan$$ now