Problem: Your company plans to borrow $5 million for 12 months, and your banker gives you a stated rate of 14% interest. You would like to know the effective rate of interest for the following types of loans. (Each of the following parts stands alone.)
a. simple 14% interest with a 10% compensating balance
b. discounted interest.
c. an installment loan (12 months)
d. discounted interest with a 5% compensating balance.