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Property worth $98,000.00 can be purchased for 10% down and semi-annual mortgage payments of $3440.00 for...

Property worth $98,000.00 can be purchased for 10% down and semi-annual mortgage payments of $3440.00 for 20 years. What effective annual rate of interest is charged?

The effective annual rate of interest is _____%
(Round the final answer to two decimal places as needed. Round all intermediate values to six decimal places as needed.)

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Answer #1

to calculate the effective rate we will use the formula,

where,

r=Effective interest rate

i=stated interest rate = 10% in this case

n=number of compounding periods = number of payments in a year = 2 in this case

r=10.25%

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