Question

The buyer of a new home is quoted a mortgage rate of 0.5% per month. The...

The buyer of a new home is quoted a mortgage rate of 0.5% per month. The APR and EAR on the loan are ________ and ________, respectively.

Group of answer choices

a.6.17%, 6.00%

b. 5.12%, 6%

c. 6.00%, 6.17%

d. 6%, 5.12%

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #2
Annual Percentage Rate (APR)
Annual Percentage Rate (APR) = Monthly interest rate x 12 Months  
Annual Percentage Rate (APR) = 0.50% per month x 12 Months  
Annual Percentage Rate (APR) = 6.00%  
Effective Annual Rate (EAR)
Effective Annual Rate (EAR) = [(1 + Monthly interest rate)^n] - 1
Effective Annual Rate (EAR) = [(1 + r)^n] - 1
Effective Annual Rate (EAR) = [(1 + 0.0050)^12] - 1
Effective Annual Rate (EAR) = [(1.0050)^12] - 1
Effective Annual Rate (EAR) = 1.061677812 - 1
Effective Annual Rate (EAR) = 0.061677812 or  
Effective Annual Rate (EAR) = 6.17% (Rounded to 2 decimal)
The APR and EAR on the loan are 6.00% and 6.17% respectively.
So, the answer woll be c. 6.00%, 6.17%
answered by: anonymous
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The effective annual rate (EAR) for a loan with stated APR of 6% compounded monthly is...
The effective annual rate (EAR) for a loan with stated APR of 6% compounded monthly is closed to: A. 6.72% B. 6.00% C. 6.66% D. 6.17%
A 30 year fixed rate mortgage has monthly payments of $ 1,500 per month and a...
A 30 year fixed rate mortgage has monthly payments of $ 1,500 per month and a mortgage interest rate of 9 % per year compounded monthly. If a buyer purchases a home with the cash proceeds of the mortgage loan plus an additional 20 % down, what is the purchase price of the home?
If the quoted interest rate on a mortgage loan is 7.5% per year CSA (compounded semi-annually)...
If the quoted interest rate on a mortgage loan is 7.5% per year CSA (compounded semi-annually) and the mortgage is to be repaid by way of equal monthly instalments, what is the appropriate period rate for one month? Select one: a. About .5229% b. About .8000% c. About .6155% d. About 1.000% e. None of the above
You are purchasing a new home and need to borrow $325,000 from a mortgage lender. The...
You are purchasing a new home and need to borrow $325,000 from a mortgage lender. The mortgage lender quotes you a rate of 6.5% APR for a 30-year fixed-rate mortgage (with payments made at the end of each month). The mortgage lender also tells you that if you are willing to pay one point, they can offer you a lower rate of 6.25% APR for a 30-year fixed rate mortgage. One point is equal to 1% of the loan value....
You need a 30-year, fixed-rate mortgage to buy a new home for $230,000. Your mortgage bank...
You need a 30-year, fixed-rate mortgage to buy a new home for $230,000. Your mortgage bank will lend you the money at a 7.6 percent APR for this 360-month loan. However, you can afford monthly payments of only $800, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. How large will this balloon payment have to be for you to keep your monthly payments at...
You need a 30-year, fixed-rate mortgage to buy a new home for $450,000. Your mortgage bank...
You need a 30-year, fixed-rate mortgage to buy a new home for $450,000. Your mortgage bank will lend you the money at a 6 percent APR for this loan. However, you can afford monthly payments of only $2,000, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single lump sum payment. How large is this lump sum payment?
You need a 25-year, fixed-rate mortgage to buy a new home for $190,000. Your mortgage bank...
You need a 25-year, fixed-rate mortgage to buy a new home for $190,000. Your mortgage bank will lend you the money at a 9.1 percent APR for this 300-month loan. However, you can afford monthly payments of only $800, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. How large will this balloon payment have to be for you to keep your monthly payments at...
You need a 20-year, fixed-rate mortgage to buy a new home for $220,000. Your mortgage bank...
You need a 20-year, fixed-rate mortgage to buy a new home for $220,000. Your mortgage bank will lend you the money at a 6.6 percent APR for this 240-month loan. However, you can afford monthly payments of only $950, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. How large will this balloon payment have to be for you to keep your monthly payments at...
You need a 25-year, fixed-rate mortgage to buy a new home for $240,000. Your mortgage bank...
You need a 25-year, fixed-rate mortgage to buy a new home for $240,000. Your mortgage bank will lend you the money at a 6.1 percent APR for this 300-month loan. However, you can afford monthly payments of only $800, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. Required: How large will this balloon payment have to be for you to keep your monthly payments...
You need a 25-year, fixed-rate mortgage to buy a new home for $250,000. Your mortgage bank...
You need a 25-year, fixed-rate mortgage to buy a new home for $250,000. Your mortgage bank will lend you the money at a 7.1 percent APR for this 300-month loan. However, you can afford monthly payments of only $900, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment. Required: How large will this balloon payment have to be for you to keep your monthly payments...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT