You are looking at a one-year loan of $15,000. The interest rate is quoted as 12 percent
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You are looking at a one-year loan of $15,000. The interest rate is quoted as 12 percent plus two points. A point on a loan is 1 percent (one percentage point) of the loan amount. Quotes similar to this one are common with home mortgages. The interest rate quotation in this example requires the borrower to pay two points to the lender up front and repay the loan later with 12 percent interest. What rate would you actually be paying here?
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Related Book For
Essentials of Corporate Finance
ISBN: 978-1260013955
10th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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