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Effective annual rate of warehousing arrangement

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As part of its short-term financing, Good MiamMiam Corp is considering using a public warehouse loan. The corporation will require a loan of $710,000. The interest on this loan will be 6.9% (APR, annual compounding) and it will be paid at the end of the year. The warehouse charges 0.59% of the face value of the loan. This is payable at the beginning of the year.

Good MiamMiam Corp would like to know: what is the effective annual rate of this warehousing arrangement?

Reference no: EM132484030

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