Question: DeAngelo Bank offers your firm a discount interest loan with an interest rate of 8.7 percent for up to $20 million, and in addition requires

DeAngelo Bank offers your firm a discount interest loan with an interest rate of 8.7 percent for up to $20 million, and in addition requires you to maintain a compensating balance of 4 percent against the amount borrowed. What is the effective annual interest rate on this lending arrangement?

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