4. A $600,000 CPM fully amortizing loan is made, at a 4% interest rate compounded monthly,...

4. A $600,000 CPM fully amortizing loan is made, at a 4% interest rate compounded monthly, for a 30 year term. Loan comes with a charge of 5 points. What is the effective annual rate on the loan?

*do work in EXCEL please*

Solutions

Expert Solution

Effective rate = 4.43%

First find the monthly payment
Loan amount	600000
Number of months	360
Rate	4%
Monthly payment	$2,864.49

Find the Effective rate
Loan amount	570000
Number of months	360
Monthly payment	$2,864.49
Rate per month	0.37%
Effective rate	4.43%

jeff jeffy answered 8 months ago

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