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A borrower has a low credit score, thus a higher risk borrower. Pass and Stow Financial Services is willing to lead $150,000 to purchase a property. The annual interest rate on the loan is 9 percent with 4 discount points and has a prepayment penalty of 5 percent. The loan is amortized over 20 years. What is the effective interest rate if the loan is paid off after seven years? Explain in detail.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91145834

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