Bestor Bookkeeping has a $150,000 compensating balance loan with its bank.The terms of the loan call for Bestor to keep 8% of the loan as a compensating balance and pay interest at an annual rate of 7.50% on the entire amount.If the firm borrows the maximum amount for one year,what is the EAR on this loan?
A) 7.50%
B) 8.15%
C) 8.35%
D) 8.67%
Correct Answer:
Verified
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