Corp-Finance-company-has-a-line-of-credit-with-bank-amount-80-000-loan-agreement

company has a line of credit with bank amount $80,000. loan agreement interest rate 7% with compensating balance of 5% based on total borrowed. compensating balance will be deposited into interest free account. what is effective interest rate on the loan if the firm needs to borrow $75,000 for one year to cover operating expenses?

 

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