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ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Two banks in the area offer 30-year, $250,000 mortgages at 6.1 percent and charge a $4,100 loan application fee. However, the application fee charged by Insecurity Bank and Trust is refundable if the loan application is denied, whereas that charged by I.M. Greedy and Sons Mortgage Bank is not. The current disclosure law requires that any fees that will be refunded if the applicant is rejected be included in calculating the APR, but this is not required with nonrefundable fees (presumably because refundable fees are part of the loan rather than a fee). What are the EARs on these two loans? What are the APRs? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) EAR APR Insecurity Bank and Trust (Refundable) I.M. Greedy and Sons Mortgage Bank (Not refundable) % % % %
Transcribed Image Text:Two banks in the area offer 30-year, $250,000 mortgages at 6.1 percent and charge a $4,100 loan application fee. However, the application fee charged by Insecurity Bank and Trust is refundable if the loan application is denied, whereas that charged by I.M. Greedy and Sons Mortgage Bank is not. The current disclosure law requires that any fees that will be refunded if the applicant is rejected be included in calculating the APR, but this is not required with nonrefundable fees (presumably because refundable fees are part of the loan rather than a fee). What are the EARs on these two loans? What are the APRs? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) EAR APR Insecurity Bank and Trust (Refundable) I.M. Greedy and Sons Mortgage Bank (Not refundable) % % % %
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