Mr Ridge range for a mortgage loan for 65% of the 2.5 million purchase price of a home. The monthly payment will be $10,400 and the mortgage term is 30 years. What is the effective annual rate?
Mr Ridge range for a mortgage loan for 65% of the 2.5 million purchase price of a home. The monthly payment will be $10,400 and the mortgage term is 30 years. What is the effective annual rate?
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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Mr Ridge range for a mortgage loan for 65% of the 2.5 million purchase price of a home. The monthly payment will be $10,400 and the mortgage term is 30 years. What is the effective annual rate?
Could you please show how this can be solved in Excel, thank you.
Expert Solution
Step 1
Loan amount = 65% of purchase price of a home
=
= 1,625,000
Number of monthly payment periods = Number of years*Frequency of payment in a year
= 30*12
= 360
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