Your firm has a line of credit with your local bank

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Your firm has a line of credit with your local bank for $50,000. The loan agreement calls for interest of 9% with a 5% compensating balance requirement which is based on the total amount borrowed. What is the effective interest rate if you need $42,750 for one year to cover your operating expenses?

8.55%

9.00%

9.13%

9.38%

9.47%

Reference no: EM13925466

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