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Matt's Machine Company Has Borrowed $10 Million for Four Months

Question 104

Multiple Choice

Matt's Machine Company has borrowed $10 million for four months at 5.5% APR compounded monthly, using inventory stored in a field warehouse as collateral. The warehouse fee is 0.5%, payable at the beginning of the loan. What is Matt's EAR?


A) 5.5%
B) 7.24%
C) 0.58%
D) 7.01%

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