Question: a. What interest rate would make it worthwhile to incur a compensating balance of $13,000 in order to get a 1 percent lower interest rate

a. What interest rate would make it worthwhile to incur a compensating balance of $13,000 in order to get a 1 percent lower interest rate on a 1 year, pure discount loan of $240,000? (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?

Yes No

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