Question

A house costs $138,000. It is to be paid off in exactly ten years, with monthly...

  1. A house costs $138,000. It is to be paid off in exactly ten years, with monthly payments of $1675. What is the APR of this loan? (Hint: calculate monthly rate first; then use APR= monthly rate*12) Do this on excel.
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Answer #1

APR is 8%

Working:

Step-1:Calculation of monthly interest rate
Monthly interest rate = =rate(nper,pmt,-pv)
= 0.67%
Nper Number of periods = 10*12 = 120
pmt monthly payment = $             1,675
pv Cost of house = $       1,38,000
Step-2:Calculation of APR
APR = Monthly Interest rate*12
= 0.67% * 12
= 8%
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