Assume that a lender has $175,000 available to lend at a rate of 4.5% per annum, compounded semi- annually. The lender is willing to amortize repayment of the funds over 25 years with monthly payments, but will limit the loan term to 5 years. If a mortgage broker charges the lender 1.5% of the face value of the loan to find a qualified borrower for these funds, what yield, expressed as an annual rate, compounded semi-annually, would the lender actually earn over the term of the loan? (1) 4.458386% (2) 4.141720 % (3) 4.864939% (4) 4.924108%
Assume that a lender has $175,000 available to lend at a rate of 4.5% per annum, compounded semi- annually. The lender is willing to amortize repayment of the funds over 25 years with monthly payments, but will limit the loan term to 5 years. If a mortgage broker charges the lender 1.5% of the face value of the loan to find a qualified borrower for these funds, what yield, expressed as an annual rate, compounded semi-annually, would the lender actually earn over the term of the loan? (1) 4.458386% (2) 4.141720 % (3) 4.864939% (4) 4.924108%
Chapter4: Time Value Of Money
Section4.17: Amortized Loans
Problem 1ST
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![20. Assume that a lender has $175,000 available to lend at a rate of 4.5% per annum, compounded semi-
annually. The lender is willing to amortize repayment of the funds over 25 years with monthly
payments, but will limit the loan term to 5 years.
If a mortgage broker charges the lender 1.5% of the face value of the loan to find a qualified borrower
for these funds, what yield, expressed as an annual rate, compounded semi-annually, would the
lender actually earn over the term of the loan?
(1) 4.458386%
(2) 4.141720%
(3) 4.864939%
(4) 4.924108%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F67faa819-71f8-4051-a838-f76989829870%2Ff192f4cf-f175-4e06-8c02-782b9407b88a%2F8rfvu2r_processed.jpeg&w=3840&q=75)
Transcribed Image Text:20. Assume that a lender has $175,000 available to lend at a rate of 4.5% per annum, compounded semi-
annually. The lender is willing to amortize repayment of the funds over 25 years with monthly
payments, but will limit the loan term to 5 years.
If a mortgage broker charges the lender 1.5% of the face value of the loan to find a qualified borrower
for these funds, what yield, expressed as an annual rate, compounded semi-annually, would the
lender actually earn over the term of the loan?
(1) 4.458386%
(2) 4.141720%
(3) 4.864939%
(4) 4.924108%
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