Question

John Blake takes out a mortgage for $80,000. There is a loan of 30 years at $600 per month. This gives a total interest of $136,000 for 30 years. What is the APR using the formula?

Answer 1

Hi there :-)

ARP IS
((2×12×136,000)÷(80,000×361))×100
=11.30%

HOPE IT HELPS

Answer 2

Answer: 8.4 %

Explanation:

Since, the monthly payment formula,

`P = (r(PV))/(1-(1+r)^(-n))`

Where, PV is the present value of the loan,

r is the rate per period,

n is the number of periods,

Here, PV = $ 80,000

P = $ 600

n = 12 × 30 = 360

Let r be the annual rate ,

⇒
`600 = ((r)/(12)* 80,000)/(1-(1+(r)/(12))^(-360))`

⇒
`600 = ((80000r)/(12))/(1-(1+r/12)^(-360))`

⇒
`600(1-(1+(r)/(12))^(-360)) = (80,000r)/(12)`

⇒
`r = 0.082`

Thus, the annual rate of interest = 0.082 = 8.2 %