Wonka's Bank offers two borrowing options: a.) Option 1: A discount interest loan with a quoted rate equal to 8 percent that requires a 20 percent compensating balance. b.) Option 2: A simple interest loan with a 10.50 percent interest rate and no compensating balance. Wonka tries to maintain a checking account balance close to $0 at the bank. If wonka needs a one- year loan, based on the rEAR , which option should it choose?
