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Question
Grant Industries owns a large warehouse outside of Austin, Texas. The property is currently free and clear of any encumbrances. An investor has offered to purchase the land under the warehouse for $10 m. The investor will charge Grant $75,000 per month rent. At the end of ten years Grant may repurchase the land at $8 million. Assuming Grant exercises its bargain repurchase option, what is Grants effective interest cost?
Answer
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