A loan with the following terms is being made:Fixed-rate, constant monthly payment. Closing date February 9th. 9% interest rate. Prepaid interest is due at closing. $70,000 mortgage loan amount. $1,500 loan discount points to be paid by the buyer/borrower to the lender. The 25-year term, monthly payments, fully amortizing.a. Calculate the APR for federal truth-in-lending purposes.b. Do you think that the APR calculated in (a) reflects the likely return that the lender willreceive over the term of the loan? List specific reasons that the lender’s actual return mightbe different from the APR
A loan with the following terms is being made:Fixed-rate, constant monthly payment. Closing date February 9th. 9% interest rate. Prepaid interest is due at closing. $70,000 mortgage loan amount. $1,500 loan discount points to be paid by the buyer/borrower to the lender. The 25-year term, monthly payments, fully amortizing.a. Calculate the APR for federal truth-in-lending purposes.b. Do you think that the APR calculated in (a) reflects the likely return that the lender willreceive over the term of the loan? List specific reasons that the lender’s actual return mightbe different from the APR
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A loan with the following terms is being made:
Fixed-rate, constant monthly payment. Closing date February 9th. 9% interest rate. Prepaid interest is due at closing. $70,000 mortgage loan amount. $1,500 loan discount points to be paid by the buyer/borrower to the lender. The 25-year term, monthly payments, fully amortizing.
a. Calculate the APR for federal truth-in-lending purposes.
b. Do you think that the APR calculated in (a) reflects the likely return that the lender will
receive over the term of the loan? List specific reasons that the lender’s actual return might
be different from the APR
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