Fiancial Management
posted by Tuty .
You decide to purchase a building for $30,000, you put $5,000 down payment. The banks offers you a 15 yr mortgage requiring annual end of year payments of $3,188. The bank also requires you to pay a 3% loan originatio fee. Compare the annual % rate of interest on this loan.

Your mortgage is for $25,000.
$3,188 * 15 = $4,782
Origination fee = 0.03 * $25,000 = $750
$4,782 + 750 = $5,532
5,532 / 2500 = ?? 
Thanks for your help :)

You're welcome.

Since you had to pay a loan origination fee of 3% of 25,000 or $750, you really received only 24,250 at the begining of the loan. Figure the A.P.R using a loan amortization program, as whatever interest rate pays off a $24,250 loan in 15 annual payments of $3,138.
Using the computation tool at
http://www.bretwhissel.net/cgibin/amortize
I get an annual percentage rate of 10.0% 
Thanks :)
Respond to this Question
Similar Questions

Finance
Sutton Corporation, which has a zero tax rate due to tax loss carryforwards, is considering a 5 year, $6,000,000 bank loan to finance service equipment. The loan has an interest rate of 10% and would be amortized over 5 years, with … 
business
Engineering Economics Essay Question: You wish to purchase a home for $150,000 and you can put down 10% of this price as down payment. You can get a 20 year fixed rate mortgage loan for 6.0% with no points. You can optionally decide … 
Economics
Engineering Economics Essay 1: You wish to purchase a home for $150,000 and you can put down 10% of this price as down payment. You can get a 20 year fixed rate mortgage loan for 6.0% with no points. You can optionally decide to pay … 
MBA Finance
Sally has won the grand prize in a lottery and must choose between the following three options: A. Receive a lump sum payment of $10,000,000 B. Receive annual end of year payments $2,000,000 for the next 8 years: C. Receive annual … 
Math
The Robinsons decide they would rather purchase the $85,000 home. Their bank requires a 5% down payment to be paid to the seller and a payment of 1 point (1%) of the mortgage at the time of closing. How much is the down payment? 
Finance
Say that you purchase a house for $270,000 by getting a mortgage for $235,000 and paying a $35,000 down payment. If you get a 15year mortgage with a 8 percent interest rate, what are the monthly payments? 
finance
You take out a 30 yr mortgage loan, purchase price is $120,000 put $20,000 down and finances the balance of $100,000 at fixed annual loan rate of 12%, what will be your monthly payment? 
Real Estate Financing
"Mr. Smith acquired a property consisting of one acre of land and a twostory building five years ago for $100,000. He also obtained an $80,000 mortgage loan from ACE Bank to provide financing to complete the purchase. This year, Mr. … 
Finance
You borrow $150,000 to purchase a new house. The bank offers you a special 20 year loan with a 7% interest rate and you will make annual payments. How large will each payment be? 
Finance
Audrey Sanborn has just arranged to purchase a $550,000 vacation home in the Bahamas with a 20 percent down payment. The mortgage has a 6.1 percent stated annual interest rate, compounded monthly, and calls for equal monthly payments …