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What is the effective annual interest rate

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Your company has arranged a revolving credit agreement for up to $65 million at an interest rate of 1.34 percent per quarter. The agreement also requires your company to maintain a compensating balance of 3 percent of the unused portion of the credit line, to be deposited in a non-interest bearing account. Your company's short-term investment account at the same bank pays an interest rate of .48 per quarter. What is the effective annual interest rate if your company borrows $30 million for one year?

Reference no: EM132552578

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