What is the ear of the most expensive loan

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Question 1: You own Howl Coffee Inc., and just decided to open up a new store in Riverside, CA. This will cost around $200,000 but you have $0 in your business account! However, three banks you have visited are willing to give you the $200,000 loan to fund the Riverside store. CSUSB Bank is offering you a $200,000 loan at 8.7% simple interest (no compounding). Bank of Riverside has offered you a $200,000 loan at 8.5% compounded daily (assume 365 days in a year). Finally, Bank of Redlands has offered you an 8.4% loan compounded monthly (12 times a year). What is the EAR of the most expensive (highest effective interest) loan?

Reference no: EM132652365

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