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73. On January 1, 2010, Lynn Company borrows $2,000,000 from National Bank at 11% annual...

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Accounting

73. On January 1, 2010, Lynn Company borrows $2,000,000 from National Bank at 11% annual interest. In addition, Lynn is required to keep a compensatory balance of $200,000 on deposit at National Bank which will earn interest at 5%. The effective interest that Lynn pays on its $2,000,000 loan is

a. 10.0%.

b. 11.0%.

c. 11.5%.

d. 11.6%.

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