Saul is a new entrepreneur who started a business. He borrowed money for 1 year to build some robots that he wants to sell. The amount of the loan was $25,000, and it had an interest rate of 15% per year. However, because Saul had not built up a credit history, the lender made him buy loan-default insurance that cost 10% of the loan amount. Moreover, the lender charged a loan setup fee of 500. What was the effective interest rate that Saul paid for the loan?

Saul is a new entrepreneur who started a business. He borrowed money for 1 year to build some robots that he wants to sell. The amount of the loan was $25,000, and it had an interest rate of 15% per year. However, because Saul had not built up a credit history, the lender made him buy loan-default insurance that cost 10% of the loan amount. Moreover, the lender charged a loan setup fee of 500. What was the effective interest rate that Saul paid for the loan?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter6: Business Expenses

Section: Chapter Questions

Problem 68P

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