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What is the interest rate firm

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Your firm has a $1,000,000 line of credit with a 20% compensating balance requirement. The quoted interest rate is 5% per year. If your firm needs to borrow $350,000 for inventory for one year, how much will your firm have to borrow after considering the compensating balance requirement? What is the interest rate your firm is effectively paying?

Reference no: EM133076611

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