Question

Given the following information about a fully amortizing loan, calculate the lender's yield (rounded to the nearest tenth of a percent). Loan amount: $166,950, Term: 30 years, Interest rate: 8 %, Monthly Payment: $1,225.00, Discount points: 2.

Answer 1

8%

Step-by-step explanation:

We use the RATE formula to find out the lender yield that is shown on the attachment

Given that,

Present value = $166,950

Future value or Face value = $10

PMT = 1,225

NPER = 30 × 12 = 360

The formula is shown below:

= Rate(NPER;PMT;-PV;FV;type)

The present value come in negative

So, after solving this, the monthly rate is 0.67%

Annually rate = 0.079

i.e 8%