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Question Help (Similar to) Compensating balance versus discount loan Weathers Catering Supply, Inc., needs to...

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Question Help (Similar to) Compensating balance versus discount loan Weathers Catering Supply, Inc., needs to borrow S147,000 for 6 months. State Bank has offered to lend the funds at an annual rate of 8.9% subject to a 10.3% compensating balance. (Note: Weathers currently maintains $0 on deposit in State Bank.) Frost Finance Co has offered to lend the funds at an annual rate of 8.9% with discourt-loan torms. The principal of both loans would be payable at matunity as a single sum. a. Calculate the effective annual rate of interest on each loan b. What could Weathers do that would reduce the effective annual rate on the State Bank loan? a. State Bank's semi-arinual rate is 1% (Round to two decimal places.) est Enter your in the answer box and then click Check Answer 4. remaining All CHA OK Type here to search O el D 12:13P 4/26/200 hp

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