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Bank required by law to report to potential borrowers

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Eloville Bank wants to earn an effective annual return on its consumer loans of 16 percent per year. The bank uses daily compounding interest on its loans. What interest rate is the bank required by law to report to potential borrowers? Explain why this rate is misleading to an uninformed borrower. Use 365 days a year - Do not round intermediate calculations and round your final answer to 2 decimal places.

Reference no: EM132813786

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