You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year mortgage loan for 80 percent of the $2,300,000 purchase price. The monthly payment on this loan will be $15,000. Therefore, the APR on this loan is
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You have just purchased a new warehouse. To finance the purchase, you've arranged for a 30-year mortgage loan for 80 percent of the $2,800,000 purchase price. The monthly payment on this loan will be $17,000. Therefore, the APR on this loan and the EAR
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To calculate the APR (Annual Percentage Rate) on a loan, you will need to know the loan amount, the interest rate, and the loan term. In this case, you have the loan amount and the loan term but need to find the interest rate.
To calculate the interest rate, first, calculate the total amount of the loan. Since you are financing 80 percent of the purchase price, you need to find 80 percent of $2,300,000:
Loan amount = 80% * $2,300,000
Loan amount = $1,840,000
Next, calculate the total payment over the loan term. You know that the monthly payment is $15,000, and the loan term is 30 years. Multiply the monthly payment by the number of months in 30 years:
Total payment = $15,000 * (30 * 12)
Total payment = $15,000 * 360
Total payment = $5,400,000
Now, you have the loan amount and the total payment. To find the interest rate, you can use an online APR calculator or an Excel spreadsheet. There are also financial formulas you can use to calculate the interest rate manually, but they can be complicated.
Using an online APR calculator or Excel spreadsheet, enter the loan amount, the total payment, and the loan term. The calculator or spreadsheet will provide the APR, which is the interest rate expressed as an annual rate.
Please note that while this method gives you an estimate of the APR, the actual APR may vary depending on additional fees, points, and other factors charged by the lender. It's always a good idea to consult with a financial professional or the lender directly to get an accurate APR.