Compensating balance requirement

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Reference no: EM13937305

The treasurer for the Macon Blue Sox baseball team is seeking a $24,200 loan for one year from the 4th National Bank of Macon. The stated interest rate is 20 percent, and there is a 19 percent compensating balance requirement. The treasurer always keeps a minimum of $1,880 in the baseball team’s checking accounts. These funds count toward meeting any compensating balance requirements. What will be the effective rate of interest on this loan?

Reference no: EM13937305

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