A property is expected to have NO/ of $106,000 the first year. The NO/ is expected to increase by 5 percent per year thereafter. The appraised value of the property Is currently $1.25 million and the lender is willing to make a $1,128,000 participation foan with a contract interest rate of 5.5 percent. The loan will be amortized with monthly payments over a 20 -year term. In addition to the regular mortgage payments, the lender will recelve 50 percent of the NO/ in excess of $106,000 each year until the loan is repaid. The lender also will recelve 50 percent of any increase in the value of the property. The loan includes a substantial prepayment penalty for repayment before year 5 , and the balance of the loan is due in year 10. (If the property has not been sold, the participation will be based on the appraised value of the property.) Assume that the appraiser would estimate the value in year 10 by dividing the NOIfor year 11 by an 8 percent capitalization rate. Required: Calculate the effective cost (to the borrower) of the participation loan assuming the loan is held for 10 years. (Note that this is also the expected return to the lender.) (Do not round intermediate colculations. Round your final answer to 2 decimal places.)