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Dr Ruth is going to borrow $5000 to help write a book The loan is for one year and the money can either be borrowed at the prime rate or the LIBOR rate Assume the prime rate is 6 percent and

Dr. Ruth is going to borrow $5,000 to help write a book. The loan is for one year and the money can either be borrowed at the prime rate or the LIBOR rate. Assume the prime rate is 6 percent and LIBOR 1.5 percent less. Also assume there will be a $40 transaction fee with LIBOR (this amount must be added to the interest cost with LIBOR). Which loan has the lower effective interest cost?

Apr 23 2020 View more View Less

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