You just borrowed $110,000 to buy a condo. You will repay the loan in equal mont

Question

You just borrowed $110,000 to buy a condo. You will repay the loan in equal monthly payments of $1,158.55 over the next 25 years. a. What monthly interest rate are you paying on the loan? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Monthly interest rate % b. What is the effective annual rate on that loan? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Effective annual rate % c. What rate is the lender more likely to quote on the loan? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Lender more likely to quote %

Explanation / Answer

Total Loan 110000

Equal Monthly payments = 1158.55

=RATE(300,1158.55,-110000,0,0,0)

=1%

Effective rate =(1+.01)^12 -1 =12.68%

Lender would qoute = 1%*12 =12%

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