# Fiancial Management

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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.

• Financial Management -

\$3,188 * 15 = \$4,782

Origination fee = 0.03 * \$25,000 = \$750

\$4,782 + 750 = \$5,532

5,532 / 2500 = ??

• Financial Management -

• Financial Management -

You're welcome.

• Fiancial Management -

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/cgi-bin/amortize
I get an annual percentage rate of 10.0%

• Fiancial Management -

Thanks :)

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