You plan to borrow $50,000 from the bank to pay for inventories for a gift shop you have just opened. The bank offers to lend you the money at 9% annual interest for the three 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 19% 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 19% 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 and part B, you were told that interest will be discounted. What is the annualized rate of interest on the loan now?