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Discounted interest with a compensating balance

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Reference no: EM131764416

My company plans to borrow $5 million for 12 months with a 14% interest rate. I want to know the effective rate of interest with 3 of the following types of loans.

a) Simple 14% interest with a 10% compensating balance.

b) Discounted interest.

c) Discounted interest with a 5% compensating balance.

Reference no: EM131764416

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