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What is the annual financing cost of the loan

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Question - Covidoo Company has a line of credit with a bank under which it can borrow funds at an 8% interest rate. The company plans to borrow P100,000 and is required by the bank to maintain a 15% compensating balance. What is the annual financing cost of the loan if the company currently maintains P7,000 in its bank account that can be used to meet the compensating balance requirement. (Assume a 365-day borrowing period.)

Reference no: EM132999495

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