You are looking at a one-year loan of $10,000. The interest rate is quoted as 12.5 percent
Question:
You are looking at a one-year loan of $10,000. The interest rate is quoted as 12.5 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 12.5 percent interest. What rate would you actually be paying here?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
To find the interest rate of a loan we need to look at the ...View the full answer
Answered By
Nyron Beeput
I am an active educator and professional tutor with substantial experience in Biology and General Science. The past two years I have been tutoring online intensively with high school and college students. I have been teaching for four years and this experience has helped me to hone skills such as patience, dedication and flexibility. I work at the pace of my students and ensure that they understand.
My method of using real life examples that my students can relate to has helped them grasp concepts more readily. I also help students learn how to apply their knowledge and they appreciate that very much.
1+ Reviews
10+ Question Solved
Related Book For 
Corporate Finance Core Principles and Applications
ISBN: 978-1259289903
5th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
Question Posted:
