Computation of the effective interest rate on the bank loan

Reference no: EM1312583

Your firm has a line of credit with your local bank for $50,000. The loan agreement calls for interest of 9% with a 5% compensating balance requirement which is based on the total amount borrowed. What is the effective interest rate if you need $42,750 for one year to cover your operating expenses?

Reference no: EM1312583

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