Answer:
$720,000
Explanation:
Data provided in the question:
Amount Tripp Corporation is planning to borrow = $800,000
Compensating balance required by the bank = 10%
Now,
Since out of the borrowed amount 10% is Compensating balance required by the bank
Therefore only 90% of the balance is available for the Tripp corporation to pay one of its suppliers
Thus,
Amount Tripp will pay its supplier will be
= 90% of the Amount Tripp Corporation is planning to borrow
= 0.90 × $800,000
= $720,000
