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The Pulaski Company has a line of credit with a bank under which it can borrow...

The Pulaski Company has a line of credit with a bank under which it can borrow funds at a 5 percent interest rate. The company plans to borrow $82,000 and is required by the bank to maintain a 20 percent compensating balance. Assume that there are 365 days per year. Determine the annual financing cost of the loan for a year under each of the following conditions:

Round your answer to two decimal places.

  • The company currently maintains $7,000 in its account at the bank that can be used to meet the compensating balance requirement.  %
  • The company currently has no funds in its account at the bank that can be used to meet the compensating balance requirement.  %
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