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Your firm is considering two one-year loan options for a $500,000 loan. The first carries fees of 2% of the loan amount and charges interest of 4% of the loan amount. The other carries fees of 1% of the loan amount and charges interest of 4.5% of the loan amount.

a. What is the net amount of funds from each loan?

b. Based on the net amounts of funds, what is the true interest rate of each loan?

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Financial Management, Finance

Category:- Financial Management
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