A corporation borrows 2 million from a bank at a 6 percent


A corporation borrows $2 million from a bank at a 6 percent prime rate. If the bank requires the company to hold 15 percent of the amount of the loan on deposit as a compensating balance, what is the effective rate of interest on the loan?

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Finance Basics: A corporation borrows 2 million from a bank at a 6 percent
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