d'Anconia Copper has borrowed $5 million for six months at a stated annual rate of 10%,using inventory stored in a field warehouse as collateral.The warehouse charges a $25,000 fee,payable at the end of the six months.The effect annual rate on this loan is closest to:

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B)The semiannual interest rate is 10%/2 = 5%.At the end of the six months d'Anconia Copper will owe $5 million × 1.05 = 5,250,000 plus the warehouse fee of $25,000 for a total of $5,275,000.The actual semiannual interest rate paid is 11ea7cce_3c3a_b94c_928c_d14a8eb25f16_TB1626_11 - 1 = 0.055 or 5.25%,expressing this as an EAR gives us (1 + .055)² - 1 = 0.113025 or 11.3025%

D'Anconia Copper Has Borrowed $5 Million for Six Months at a Stated