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Your firm is negotiating a 4 year loan of $ 1 . 5 million with a dealer. The monthly payment is $ 4 0 ,

Your firm is negotiating a

4

year loan of $

1.5

million

with a dealer. The monthly payment is $

40, 000 .

Your

firm can borrow money from the bank at

12 %

APR with

monthly compounding.

1 .

What is the IRR of the loan?

2 .

Should your firm take out this loan? Why?

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