Western Financial made a $150,000, 5-year discount loan at 8%interest, requiring a compensating bala

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Western Financial made a $150,000, 5-year discount loan at 8%interest, requiring a compensating balance equal to 20% of the facevalue of the loan. Determine the effective annual rate associatedwith this loan.
(Note: Assume that the firm currently maintains $0 on deposit inthe financial institution.)

 
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