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QUESTION
A firm has a $200,000 line of credit with a 5% compensating balance requirement. The quoted rate on the line is prime +5%, and the prime rate is...
A firm has a $200,000 line of credit with a 5% compensating balance requirement. The quoted rate on the line is prime +5%, and the prime rate is currently 2.5%. What is the effective annual rate (EAR)?
