Effective cost of a loan

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Effective Cost of A Loan: Business is good but you have ambitions to make it exceptional. In order for your dreams to come true you will need to borrow 5 million dollars. You seek the following terms: annual interest ≤ 9.5%, a 2.5 year term, all interest and principle payments deferred to the end of the 2.5 year term of the loan and front-end costs ≤ $50,000. Your criteria are based on what you determined to be your maximum effective cost. Using the information provided, determine the effective cost and whether your project maximums are acceptable.

Note: deferred payments compound over the life of this loan on a monthly basis.

Reference no: EM131297455

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