Bank lending: White Azalea Ltd is looking for a five-year term loan of $3 million. Its bank is willing to make the loan. The company will have to pay a premium of 1.5 per cent for default risk and another 0.75 per cent for maturity risk. The current prime rate is 7.5 per cent. What is the loan rate on this bank loan?
A) 9%
B) 8.25%
C) 9.75%
D) 7.5%
Correct Answer:
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