Question: Randall Corporation plans to borrow 233 000 for one year at
Randall Corporation plans to borrow $233,000 for one year at 20 percent from the Waco State Bank. There is a 21 percent compensating balance requirement. Randall Corporation keeps minimum transaction balances of $17,500 in the normal course of business. This idle cash counts toward meeting the compensating balance requirement. What is the effective rate of interest?
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