Conways Roofing Services Is Offered a $1 Million Line of Credit

Multiple Choice

Conways Roofing Services is offered a $1 million line of credit for three months at an APR of 8%. The bank requires that the firm keep an amount equal to 12% of the loan principal in a non-interest-earning account with the bank as long as the loan remains outstanding. What is the actual three-month interest rate paid, expressed as an EAR?

A) 9.41%
B) 24.40%
C) 60.30%
D) 80.40%