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What is the effective rate of interest

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Question - Makkari Inc. plans to borrow P425,000 for one year at 10% from Eternals Bank. A 5% compensating balance is required based on the contract of the loan. Makkari Inc. also keeps a minimum transaction balance of P20,000. What is the effective rate of interest?

a. 10.03%

b. 11.65%

c. 10.53%

d. 11.07%

Reference no: EM133061014

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