Musk Corporation needs $200,000 to pay its bills, and requires a 25% compensating balance to be maintained with the bank. Assuming that Musk currently holds no funds at the lending bank, Musk has to borrow:

Question

Quizplus · Accepted Answer

To have $200,000 available after maintaining a 25% compensating balance, Musk needs to borrow $266,667. This is calculated as $200,000 / (1 - 0.25).

Musk Corporation Needs $200,000 to Pay Its Bills, and Requires