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Hi, I am not able to find the correct steps and answers to solvethis problem. Please help. Thanks!A bank offers your firm a revolving credit arrangement for up to$61 million at an interest rate of 1.48 percent per quarter. Thebank also requires you to maintain a compensating balance of 2percent against the unused portion of the credit line, to bedeposited in a noninterest-bearing account. Assume you have ashort-term investment account at the bank that pays .89 percent perquarter, and assume that the bank uses compound interest on itsrevolving credit loans.a) What is your effective annual interest rate (an opportunitycost) on the revolving credit arrangement if your firm does not useit during the year? EAR: %(b) What is your effective annual interest rate on the lendingarrangement if you borrow $35 million immediately and repay it inone year? EAR: %(c) What is your effective annual interest rate if you borrow$61 million immediately and repay it in one year? EAR: %