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QUESTION
A bank agrees to loan you $12,000 at 7.2% if you, as a condition of the loan, agree to keep a compensating balance of 10% at the bank. If you do not...
A bank agrees to loan you $12,000 at 7.2% if you, as a condition of the loan, agree to keep a compensating balance of 10% at the bank. If you do not keep a balance at this bank:
A. What is the equivalent rate you pay for the loan?
Round answer to FOUR decimal places (i.e. .xxxx). Do not use a percentage sign (%).
