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A developer takes out a 2-year, 5.50% interest-only construction loan for $5,040,000. Construction will take 12 months during which the interest will be carried. Funds
A developer takes out a 2-year, 5.50% interest-only construction loan for $5,040,000. Construction will take 12 months during which the interest will be carried. Funds are drawn down evenly during construction so the interest carried for Year 1 is $129,011. During Year 2, the interest will be paid out of the operating budget. How much will need to be refinanced when the developer converts the construction loan to a permanent loan at the end of Year 2?
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