American Sandhill management is planning to make a $3.5 million loan to a French firm. Currently, LIBOR is at 1.9 percent. American management considers a default risk premium of 1.55 percent, a foreign exchange rate risk premium of 0.35 percent, and a country risk premium of 0.13 percent to be appropriate for this loan. What is the loan rate charged by American Sandhill?

Loan rate charged

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