Compensating balance to obtain the lower rate

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Reference no: EM131915445

A. What interest rate would make it worthwhile to incur a compensating balance of $25,000 in order to get a 1 percent lower interest rate on a 1 year, pure discount loan of $300,000? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.)

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

Reference no: EM131915445

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