Multiple Choice
A bank lends a firm $500,000 for one year at 8 percent and requires compensating balances of 10 percent of the face value of the loan. The effective annual interest rate associated with this loan is ________.
A) 8.9 percent
B) 8 percent
C) 7.2 percent
D) 7.0 percent
Correct Answer:
Verified
Correct Answer:
Verified
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