You are looking at a one-year loan of $10,000. The interest rate is quoted as 13.4 percent
Question:
You are looking at a one-year loan of $10,000. The interest rate is quoted as 13.4 percent plus two points. A point on a loan is 1 percent (one percentage point) of the loan amount. Quotes similar to this one are very common with home mortgages. The interest rate quotation in this example requires the borrower to pay two points to the lender up front and repay the loan later with 13.4 percent interest. What rate would you actually be paying here?
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To find the interest rate of a loan we need to look at the ...View the full answer
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Related Book For 
Corporate Finance Core Principles And Applications
ISBN: 9781260571127
6th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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