Effective annual rate of interest on the credit line

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Reference no: EM132019069

Jackson Industries has borrowed $125,000 under a line-of-credit agreement. Although the company normally maintains a checking account balance of $15,000 in the lending bank, this ccredit line requires a 20% compensating balance. The stated interest rate on the borrowed fundsd in 10% What is the effective annual rate of interest on the credit line?

Reference no: EM132019069

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