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2. A bank loan agreement calls for an interest rate equal to prime rate plus 1%. If prime rate averages 9% and

non-interest-earning compensating balances equal to 10% of the loan must be maintained, what are the APR and the APY of the loan assuming annual payments?

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Finance - 8226397.doc

A bank loan agreement calls for an interest rate equal to prime rate plus 1%. If prime rate averages 9%
and non-interest-earning compensating balances equal to 10% of the loan must be maintained,...

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