Question

Straight bank loan. Right Bank offers EAR loans of 8.97% and requires a monthly payment on all loans. What is the APR for these monthly loans? What is the monthly payment for a loan of (a) $205,000 for 7 years, (b) $430,000 for 11 years, or (c) $1,100,000 for 29 years? What is the APR for these monthly loans? % (Round to three decimal places.)

Straight bank loan.  Right Bank offers EAR loans of 8.97 % and requires a monthly payment on all loans. What is the APR for these monthly​ loans? What is the monthly payment for a loan of ​(a​) $205,000 for 7 ​years ​(b​) $430,000 for 11 ​years, or ​(c​) 1,100,000 for 29 years?

Answer 1

APR = 12[(1.0897)^1/12 - 1] = 8.62%

a.

Calculating Monthly Payment,

using TVM Calculation,

PMT = [PV = 205,000, FV = 0, N = 84, I = 0.0862/12]

PMT = $3,258.66

b.

Calculating Monthly Payment,

using TVM Calculation,

PMT = [PV = 430,000, FV = 0, N = 121, I = 0.0862/12]

PMT = $5,331.08

c.

Calculating Monthly Payment,

using TVM Calculation,

PMT = [PV = 1,100,000, FV = 0, N = 348, I = 0.0862/12]

PMT = $8,615.35