Question: A company issued a short-term note payable with a stated 12% rate of interest to a bank. The bank charged a .5% loan origination fee

A company issued a short-term note payable with a stated 12% rate of interest to a bank. The bank charged a

.5% loan origination fee and remitted the balance to the company. The effective interest rate paid by the company in this transaction would be

a. Equal to 12.5%.

b. More than 12.5%.

c. Less than 12.5%.

d. Independent of 12.5%.

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