Question

Choose the correct answers. Tom Henderson takes out a $120,000 mortgage. He paid 1.6% of the loan amount in closing costs and $8,962.49 in total interest the first year of the loan. What are Tom's closing costs? (Hint: multiply the percentage by the loan amount.) $ If the APR is (interest for one year plus closing costs) ÷ (amount financed), what was the APR for that year? % If the APR is (interest only for one year) ÷ (amount financed), what was the APR (to the nearest tenth) for that year? %

Answer 1

Tom's closing costs: $1920

APR for that year? 9.1%

APR (to the nearest tenth) for year? 7.5%

Hope it helped!

Answer 2

Answer: $1,920, 9.1%, and 7.5%

Explanation:

Principal = $120,000

r = 1.6

Closing cost = $8962.49

1. Interest

I = p×r×t

= $120000 × 1.6/100 ×1

= $1920

2. APR for one year

(interest for one year + closing costs) ÷ (amount financed) × 100

=( 1920 + 8962.49 )÷ 120000 × 100

= 10882.49 ÷ 120000 ×100

= 0.09068 ×100

= 9.1%

3. APR for that year in %

APR = (interest only for one year) ÷ (amount financed)

= 8,962.49 ÷ 120,000 × 100

= 0.07468 ×100

= 7.5%