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Your company has agreed to a $490 million fixed-commitment line of credit. The loan agreement calls for your company to pay 1.56 percent per quarter

Your company has agreed to a $490 million fixed-commitment line of credit. The loan agreement calls for your company to pay 1.56 percent per quarter on any funds borrowed and maintain a 5 percent compensating balance on any funds borrowed at zero percent interest. What is the effective annual interest rate on this line of credit?

Multiple Choice

5.48%

6.39%

5.68%

6.56%

6.72%

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