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You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year mortgage loan for 80 percent of the $2,800,000 purchase price. The monthly payment on this loan will be $17,
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You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year mortgage loan for 80 percent of the $2,800,000 purchase price. The monthly payment on this loan will be $17,000. a. What is the APR on this loan

User Theodore Lytras
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1 Answer

2 votes

Answer:

the APR on this loan is 8.68 %.

Step-by-step explanation:

First determine the nominal rate compounded monthly on this mortgage as follows :

n = 30 × 12 = 360

Pv = $2,800,000 × 80% = $2,240,000

pmt = - $17,000

p/yr = 12

FV = $0

r = ?

Using a Financial Calculator, the nominal rate compounded monthly, r on this mortgage is 8.3588 or 8.36 %.

Then, find the Annual Percentage Rate :

8.36 Shift NOM %

12 Shift P/YR

Shift EFF% 8.68 %

Again using a Financial calculator as above, the APR on this loan will be 8.6879 or 8.68 %

User David Demetradze
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