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A company has a $2 million line of credit requiring a 5% compensating balance on...

A company has a $2 million line of credit requiring a 5% compensating balance on usage. For the next year, the company projects a usage of 75% and a 10.375% interest rate. If the balance requirement is eliminated, by how many basis points will the company's effective interest rate be reduced?

A.

18

B.

30

C.

55

D.

74

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