Property worth 185,000.00 can be purchased for 5% down and quarterly mortgage payments of $3500.00 for 25 years. What effective annual rate of interest is charged?
Loan Amount = 185,000(1 - 0.05) = $175,750
Calculating APR,
Using TVM Calculation,
I = [PV = 175,750, PMT = -3,500, N = 100, FV = 0]
I = 6.29%
EAR = (1 + 0.0629/4)4 - 1
EAR = 6.44%
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