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.
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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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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