2B5DD KELLER PRODUCTS NEEDS $150,000 OF ADDITIONAL FUNDS OVER THE NEX...

181.

CSO: 2B5f

LOS: 2B5dd

Keller Products needs $150,000 of additional funds over the next year in order to satisfy a

significant increase in demand. A commercial bank has offered Keller a one-year loan at

a nominal rate of 8%, which requires a 15% compensating balance. How much would

Keller have to borrow, assuming it would need to cover the compensating balance with

the loan proceeds?

a.

$130,435.

b.

$172,500.

c.

$176,471.

d.

$194,805.