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.)
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To determine the comparable interest rate for a loan, you need to calculate the total amount of interest and fees charged on the loan and then calculate the interest rate based on the loan amount.
In this case, the quoted information for the loan is 10.7% + 0.5 point + $200.
To begin, let's calculate the amount of interest and fees on the loan.
Step 1: Calculate the amount of interest
$60,000 * 10.7% = $6,420
Step 2: Calculate the amount of fees
0.5 point is equivalent to 0.5% of the loan amount.
$60,000 * 0.5% = $300
Step 3: Add the fees to the interest
$6,420 + $300 = $6,720
Next, let's calculate the equivalent interest rate.
Step 4: Calculate the equivalent interest rate
Equivalent Interest Rate = Total Interest and Fees / Loan Amount * 100
Equivalent Interest Rate = $6,720 / $60,000 * 100
Equivalent Interest Rate = 11.2%
Therefore, the comparable interest rate for a $60,000 loan with 10.7% + 0.5 pt + $200 in fees is 11.2%.