Friedman Roses Inc. needs $65,000 in funds for expansion. With a compensating balance requirement of 20%, how much will the firm need to borrow?

Name: Friedman Roses Inc. needs $65,000 in funds for expansion. With a compensating balance requirement of 20%, how much will the firm need to borrow?
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To meet the $65,000 need with a 20% compensating balance requirement, the firm must borrow an amount such that 80% of it equals $65,000. Calculating this, $65,000 / 0.80 = $81,250.