You obtain a loan of $300,000 at 5.75% amortized over thirty years with monthly payments.

Can you please help me the steps of this Finance Math problem?

You obtain a loan of $300,000 at 5.75% amortized over thirty years with monthly payments. You are required to pay closing costs and fees of 1.0% of the loan amount to the lender. What is the yield of the loan if paid off at maturity?

Solutions

Expert Solution

first calculate the monthly payments

PV = 300,000, FV = 0, rate = 5.75%/12, N = 360

use PMT function in Excel

monthly payments = 1,750.7186

PV = 300,000, FV = -0.01*300,000, PMT = -1750.7186 , N = 360

use rate funciton in Excel and multiply by 12

yield = 5.7664%

jeff jeffy answered 1 year ago

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