Randall corporation plans to borrow 250000 for one year at


Randall Corporation plans to borrow $250,000 for one year at 21 percent from the Waco State Bank. There is a 29 percent compensating balance requirement. Randall Corporation keeps minimum transaction balances of $16,000 in the normal course of business. This idle cash counts toward meeting the compensating balance requirement.

What is the effective rate of interest?

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Finance Basics: Randall corporation plans to borrow 250000 for one year at
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