Juno Industrial Supply has a $150,000 line of credit with a 6.5 percent interest rate. The loan agreement requires a 2 percent compensating balance, which is based on the total amount borrowed, and which will be held in an interest-free account. What is the effective interest rate if the firm borrows $91,800 on the line of credit for one year?

A. 6.42 percent

B. 6.47 percent

C. 6.50 percent

D. 6.58 percent

E. 6.63 percent

Answer rating: 100% (QA)

E 663 percent Effective a... View the full answer