After careful investigation, the VC agrees that it is a good business but is too risky for the VC to make an equity investment. They want to make a loan to your firm at a fixed interest rate of annualized 9% for a 10-year period. Meanwhile, the VC hates to miss the upside potential if your firm becomes next Facebook.

What could the VC possibly do with the loan to share some of your firms growth potential?

You appreciate the VCs funding, but you want to keep the option of paying off the debt earlier open. If you insist including this provision in the debt indenture, what would be the interest rate be if everything else is unchanged? Explain why.