Over the spring break, you shopped for a mortage for your first year since you heard the mortage rates are at an all-time low. You got a quote from a bank with an effectiveannual rate of 3.0% on a 30 year mortage, that will be paid back in monthly installments. The loan amount is $100,000. However, in order to receive this relatively low interest rate, the bank required that you pay 2-points during the origination of your loan (a point is 1% of your loan). With you paying this one-time fee at the start of your loan,what is the ACTUAL effective annual rate that you will be paying on your loan? Use a spreadsheet to solve the problem.
Over the spring break, you shopped for a mortage for your first year since you heard the mortage rates are at an all-time low. You got a quote from a bank with an effectiveannual rate of 3.0% on a 30 year mortage, that will be paid back in monthly installments. The loan amount is $100,000. However, in order to receive this relatively low interest rate, the bank required that you pay 2-points during the origination of your loan (a point is 1% of your loan). With you paying this one-time fee at the start of your loan,what is the ACTUAL effective annual rate that you will be paying on your loan? Use a spreadsheet to solve the problem.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter22: Providing And Obtaining Credit
Section: Chapter Questions
Problem 2P: Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for...
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Over the spring break, you shopped for a mortage for your first year since you heard the mortage rates are at an all-time low. You got a quote from a bank with an effectiveannual rate of 3.0% on a 30 year mortage, that will be paid back in monthly installments. The loan amount is $100,000. However, in order to receive this relatively low interest rate, the bank required that you pay 2-points during the origination of your loan (a point is 1% of your loan). With you paying this one-time fee at the start of your loan,what is the ACTUAL effective annual rate that you will be paying on your loan? Use a spreadsheet to solve the problem.
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