Question: a. What interest rate would make it worthwhile to incur a compensating balance of $10,500 in order to get a 0.65 percent lower interest rate

a. What interest rate would make it worthwhile to incur a compensating balance of $10,500 in order to get a 0.65 percent lower interest rate on a 2 year, pure discount loan of $180,000? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)

Interest rate

b.	Is it worth incurring the compensating balance to obtain the lower rate?

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