Second Bank offers J and J Enterprises a $250,000 line of credit at an annual rate of interest of 8.75 percent.The loan agreement also requires a 5 percent compensating balance on any funds used.What is the effective annual interest rate if the firm borrows $195,000 for the entire year?
A) 8.93%
B) 9.06%
C) 9.40%
D) 9.21%
E) 9.54%
Correct Answer:
Verified
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