Your company plans to borrow $5 million for 12 months, and your banker gives you a stated rate of 8 percent interest. You would like to know the annual rate of interest for the following types of loans. (Each of the following parts stands alone.)
a. Simple 8 percent interest with a 10 percent compensating balance.
b. Discounted interest.
c. An instalment loan (12 payments).
d. Discounted interest with a 1 percent administration fee.