Question
You own Howl Coffee Inc., and just decided to open up a new store in Riverside, CA. This will cost around $200,000 and you have
You own Howl Coffee Inc., and just decided to open up a new store in Riverside, CA. This will cost around $200,000 and you have $0 in your business account!
However, three banks you have visited are willing to give you the $200,000 loan to fund the Riverside store. CSUSB Bank is offering you a $200,000 loan at 10.50% simple interest (no compounding). Bank of Riverside has offered you a $200,000 loan at 10% compounded daily (assume 365 days in a year). Finally, Bank of Redlands has offered you an 9.89% loan compounded continuously. What is the EAR of theleast expensive (lowest effective interest)loan?
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