Determine the comparable interest rate for a $70,000 loan when the quoted information is 12.4% + 0.5 pt + $200
To determine the comparable interest rate for a $70,000 loan when the quoted information is 12.4% + 0.5 pt + $200, we need to break down each component and calculate the total interest rate.
1. Convert the percentage to decimal form:
12.4% = 0.124
2. Calculate the additional interest rate for the 0.5 pt (pt stands for percentage point):
0.5 pt = 0.005 * $70,000 (loan amount) = $350
3. Add the fixed amount ($200) to the additional interest rate:
Additional interest rate = $350 + $200 = $550
4. Calculate the total interest rate:
Total interest rate = 0.124 + ($550 / $70,000)
Let's calculate the total interest rate:
Total interest rate = 0.124 + (550 / 70000)
Total interest rate = 0.124 + 0.007857...
Therefore, the comparable interest rate for a $70,000 loan with the given quoted information is approximately 12.4879% (rounded to four decimal places).