Dr. Ruth is going to borrow $1800 to help write a book. The loan is for one year and the money can be borrowed at the prime rate or LIBOR. Assume that the prime rate is 8 percent and LIBOR is 2.5 percent less. She also assumes that there will be a transaction fee of $55 with LIBOR (this amount must be added to the interest cost with LIBOR). to. What is the effective interest rate of the LIBOR loan? (*** Use a 360-day year . Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.)

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To calculate the effective interest rate of the LIBOR loan we need to consider t... View the full answer