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You are looking at a one-year loan of $21,000. The interest rate is quoted as 11 percent plus two points. A point on a loan is simply 1 percent (one percentage point) of the loan amount. Quotes similar to this one are common with home mortgages. The interest rate quotation in this example requires the borrower to pay two points to the lender up front and repay the loan later with 11 percent interest. Required: What rate would you actually be paying here? what is interest rate?

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Financial Management, Finance

Category:- Financial Management
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