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Calculate the loan’s annual financing cost

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Van Buren Resources, Inc., is considering borrowing $100,000 for 182 days from its bank. Van Buren will pay $6,000 of interest at maturity, and it will repay the $100,000 of principal at maturity.

a. Calculate the loan’s annual financing cost.

b. Calculate the loan’s annual percentage rate.

c. What is the reason for the difference in your answers to parts a and b?

Reference no: EM131119964

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