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A foreign investor borrowed $36 million for the acquisition of a180,000 square foot shopping center in Boulder, Colorado at apurchase price of $54 million. The mortgage loan was a 30-yearfully amortizing fixed rate loan at a stated annual interest rateof 5% payable monthly and the borrower was charged 2 points by thelender at closing.What was the effective annual interest rate on the loan if theloan was carried to maturity?What was the effective annual interest rate on the loan if theprincipal balance was fully repaid at the end of 10 years?
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