7. After living with roommates in Boston for many years, you are ready to purchase your first home. And as luck would have it, you found a really nice condominium in Boston for a purchase price of $400,000. After meeting with several banks to determine how you will finance the purchase of the condo, you have discovered the following:

The banks will require you to make a down payment at the time of sale equal to 20% of the purchase price of the property (assume you have this amount of cash on hand); Interest will be compounded monthly for the loan at a rate to be determined; and

The banks will loan you the purchase price less the down payment (80% of the purchase price) for a period of 30 years. You can only afford to pay $1,500 per month for a mortgage payment (assume no real estate tax escrowing or fees). What is the maximum annual interest rate that you could have for this loan to prevent you from paying more than $1,500 per month toward your mortgage?