Problem $14-9$ Compensating Balance $($LG$14-7)$

What interest rate would make it worthwhile to incur a compensating balance of $$20,000$ in order to get a $1-$percent lower interest rate on a $1-$year, pure discount loan of $$275,000?($Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to $2$ decimal places.$)$

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

multiple choice

Yes

No