A $10 million principal amount, 3-year, term loan carries an interest rate of 10 percent. All interest payments (which would normally be due at the end of each year)

are deferred until the end of 3 years. The unpaid interest amount compounds at a 10 percent annual rate during the period(s) it remains unpaid. At the end of 3 years, the borrower must repay the principal amount, the deferred interest, plus interest on the deferred interest. The lender also charges a front-end loan origination fee on this loan of $100,000. Compute the effective cost of this loan?  L01