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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?

User TheFuzz
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2 Answers

6 votes
Hi there :-)

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

HOPE IT HELPS
User Thomas Praxl
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6 votes

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 %

User DCR
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