Gemini Real Estate Is Offered a $2 Million Line of Credit

question 94

Multiple Choice

Gemini Real Estate is offered a $2 million line of credit for four months at an APR of 9%. This loan has a loan origination fee of 1.5%. What is the actual four-month interest rate paid, expressed as an EAR?

• A) 4.57%
• B) 9.68%
• C) 12.44%
• D) 14.34%

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Definitions:

Recirculating Ball

A type of steering system mechanism that utilizes a series of balls to reduce friction and provide smoother steering control.

Belt-driven

Describes mechanisms or devices powered by a belt, which transfers movement and power from one pulley to another.

Pump

A mechanical device used to move fluids or gases from one place to another by creating pressure differential.

Steering Wheel

The component of a vehicle that the driver uses to control the direction of the vehicle by turning it in the desired direction.