An insurance company is negotiating contract terms on a $100m commercial mortgage loan with a potential borrower. The loan in question is a monthly

payment, 20-year amortization, fixed rate balloon with a seven-year term (i.e., maturity), and annual interest rate of 5.85% and 1.5 points of disbursement discount. Calculate the yield to the lender assuming the loan is held to the end of the term (assume a loan amount of $100, ignore the millions).