Consider two loans with? one-year maturities and identical face? values: a(n) 8.0% loan with a 1.00% loan origination fee and? a(n) 8.0% loan with a 5.0% ?(no-interest) compensating balance requirement.
What is the effective annual rate?(EAR?) associated with each? loan? Which loan would have the highest EAR and? why?
The EAR in first case is ____%