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QUESTION
Randall Corporation places to borrow $200,000 for one year at 12 percent from the Waco Bank. There is a 20 percent compensating balance requirements....
Randall Corporation places to borrow $200,000 for one year at 12 percent from the Waco Bank. There is a 20 percent compensating balance requirements. Randall Corporation keeps minimum transaction balances of $10,000 in the normal course of business. This idle cash counts towards meeting the compensating balance requirement. What is the effective rate of interest?
