Multiple Choice
Holland Construction Co. has an outstanding 180-day bank loan of $475,000 at an annual interest rate of 7.5%. The company is required to maintain a 15% compensating balance in its checking account. What is the effective interest rate on the loan? Assume the company would not normally maintain this average amount.
A) 11.2%
B) 19.0%
C) 22.45%
D) 8.8%
Correct Answer:
Verified
Correct Answer:
Verified
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