Question: You borrow $ 5 0 0 , 0 0 0 from a bank to buy a $ 6 0 0 , 0 0 0 building.

You borrow $500,000 from a bank to buy a $600,000 building. You amortize the loan (annually) over 25 years and are able to negotiate a 6% interest rate if you pay 2 discount points to the lender at the time of closing of the loan.
What is your effective interest rate?

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