here is the question:
company a has arranged to finance its seasonal working capital needs with short term bank loan. the loan will cary a rate of 12% per annum with interest paid in advance. in addition, the company must mantain a minimum demand deposit with the bank of 10% of the loan balance throughout the term of the loan. if the company plans to borrow $100,000 for a period of 3 months, what is the effective cost of the bank loan?

here is what we've all tried:
APR which is interest divided by (principal x time)
interest is calculated by principal x rate x time

APY which is (1+i/m) to the m power - 1

the answer is 13.76% according to the back of the book and i cannot seem to figure it out. thanks!