Second bank offers j and j enterprises a 250000 line of


Second Bank offers J and J Enterprises a $250,000 line of credit at an annual rate of interest of 8.75 percent. The loan agreement also requires a 5 percent compensating balance on any funds used. What is the effective annual interest rate if the firm borrows $195,000 for the entire year?

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Financial Management: Second bank offers j and j enterprises a 250000 line of
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