How low would the interest rate on the loan

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Reference no: EM131563755

Suppose your firm is seeking a five year, amortizing $330,000 loan with annual payments and your bank is offering you the choice between a $341,500 loan with a $11,500 compensating balance and a $330,000 loan without a compensating balance. The interest rate on the $330,000 loan is 10.0 percent.

How low would the interest rate on the loan with the compensating balance have to be for you to choose it?

Reference no: EM131563755

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