Multiple Choice
Luther Industries is offered a $1 million loan for four months at an APR of 9%. If Luther's bank requires that the firm maintain a compensating balance equal to 10% of the loan amount in a non-interest-earning account, then the effective annual rate EAR for this loan is closest to ________.
A) 10.3%
B) 12.6%
C) 14.4%
D) 71.5%
Correct Answer:
Verified
Correct Answer:
Verified
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