Thabos Transport needs R50 000 to support its short-term financing requirements during the next year. The company
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Question:
Thabos Transport needs R50 000 to support its short-term financing requirements during the next year. The company is evaluating its financial options at the bank where it maintains its current account, which averages a balance of R3 000. The bank has offered Thabo a 10% simple interest loan that has a 20% compensating balance requirement. If Thabos Transport borrows R50 000 and uses its existing current account to help satisfy the compensating balance requirement, what is the loans APR?
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