A 3% loan was granted to Simeoni Ltd. in 20X2. The principal amount was $8,140,000 and the term was three years. Interest is paid at the end of each year. In addition, the lender charged an upfront fee of $443,325 for evaluating the loan application. Simeoni plans to expense this as a financing fee in 20X2. Management was delighted to get a 3% loan because other financial institutions had bid a much higher interest rate for the same terms and security.

Required:

1. Did Simeoni get a 3% loan? Calculate the effective interest rate associated with the loan. (Round your answer to the nearest whole percentage.)

2. What is the appropriate accounting treatment of the upfront fee?

3. Give the required entries for Simeoni over the life of the loan. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations and final answers to the nearest whole dollar amount.)