What is compensating balance on loan

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Reference no: EM131910858

The Clarkson Designer Company wants to borrow $750,000. The bank will provide the loan at an APR of 7.770. Since the loan calls for a compensating balance, the effective interest rate is actually 9.795 percent. What is the compensating balance on this loan? (Round answer to 1 decimal place, e.g. 12.2%.)

The compensation balance on the loan is ________ %

Reference no: EM131910858

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