A company receives a 5-year 8% accrued interest $100,000 principal loan. Principal (and accrued interest) is only
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Question:
A company receives a 5-year 8% accrued interest $100,000 principal loan. Principal (and accrued interest) is only paid at the end of 5 years. The company must pay the lender 4% fees up front and has to give the lender an equity interest in the company expected to be worth $15000 in 5 years. What is the effective annual return to the lender on the loan? Express your answer as a percentage to the nearest tenth of a percent i.e. 10.5% should be recorded as 10.5
Expert Answer:
To find the effective annual return to the lender on the loan we need to calculate the to... View the full answer
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