Compute the effective annual percentage rate of the loan

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Huskie Bank has provided the Mucklup Manufacturing Company with a 2-year term loan for $200,000 at a stated annual rate of interest of 10 percent.

Interest for the entire 2-year period must be prepaid; that is, the loan's total interest payments must be made at the same time the loan is granted.

Mucklup is required to repay the entire $200,000 principal balance at the end of the 2-year period. Compute the effective annual percentage rate of the loan.

Reference no: EM131334945

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