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TBTF Bank makes a 1 3 year interest only loan to AFC Inc of $ 4 , 2 0 0 , 0 0 0 .
TBTF Bank makes a year interest only loan to AFC Inc of $ The interest rate on the loan is i and the payments will be made monthly. TBTF reinvests the payments at an interest rate of i At maturity, what is TBTF Bank's annual ROI over the lifetime of the loan? AFC does not default.
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