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You plan to borrow $10,000 from your bank, which offers to lend you the money at an 11 percent nominal, or stated, rate on a 1-year loan. What is the effective interest rate if the loan is a discount loan with a 15 percent compensating balance?

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Nestor Rutherford
Nestor RutherfordLv2
28 Sep 2019

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1. Lawton Pipelines has developed plans for a new pump that will allow more economical operation of the company’s oil pipelines. Management estimates that $2,400,000 will be required to put this new pump into operation. Funds can be obtained from a bank at 10 percent discount interest for one year.

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