Determine the comparable interest rate for a $60,000 loan when the quoted information is 10.7% + 0.5 pt + $200. (Round your answer to two decimal places.
To determine the comparable interest rate for the loan, we need to factor in all the quoted information. Here's a step-by-step explanation on how to calculate it:
Step 1: Convert the point (pt) to a decimal value.
- Since 0.5 pt is equivalent to half a percent, we convert it to 0.005.
Step 2: Calculate the total additional amount based on the quoted information.
- Add the 10.7% interest rate, 0.5 pt, and $200 together to get the total additional amount:
- 10.7% + 0.005 + $200 = 0.107 + 0.005 + $200 = $200.112
Step 3: Calculate the total loan amount.
- Add the original loan amount to the total additional amount:
- $60,000 + $200.112 = $60,200.112
Step 4: Calculate the interest rate.
- Divide the total additional amount by the original loan amount, then multiply by 100 to get the interest rate as a percentage:
- ($200.112 / $60,000) * 100 = 0.33352 * 100 = 33.35 (rounded to two decimal places)
Therefore, the comparable interest rate for this loan, considering the quoted information, is approximately 33.35%.