Question 6: A bank reviews the losses on its real estate loans. The bank estimates...
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Question 6: A bank reviews the losses on its real estate loans. The bank estimates that .5% of the outstanding principal on its loans are not paid back on a yearly basis. The total outstanding principal on its real estate loans are $20 million dollars. If the bank determines that the optimal or desired rate (r) for its real estate loan is 3.75%, what is the actual yearly interest rate that the bank should charge to compensate for its expected losses? Show your answer to 4 decimal places, enter 6.31% enter as .0631
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