Question: Consider two loans with a 1-year maturity and identical face values: a(n) 7.5% loan with a 0.96% loan origination fee and a(n) 7.5% loan with

Consider two loans with a 1-year maturity and identical face values: a(n) 7.5% loan with a 0.96% loan origination fee and a(n) 7.5% loan with a 4.7% (no-interest) compensating balance requirement. Which loan would have the higher effective annual rate (EAR)? Why?

The EAR in the first case is ??%. (Round to one decimal place.)

The EAR in the first case is ??

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