A house is for sale for $1,000,000. You have a choice of two 25-year mortgage loans...

 

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A house is for sale for $1,000,000. You have a choice of two 25-year mortgage loans with constant monthly payments: (1) if you make a down payment of $100,000, you can obtain a loan with a 7.5% APR compounded monthly or (2) if you make a down payment of $200,000, you can obtain a loan with a 6.5% APR compounded monthly. What is the APR on the additional $100,000 borrowed on the first loan assuming both loans have none other fees and the borrower will pay off both loan in 300 months. A house is for sale for $1,000,000. You have a choice of two 25-year mortgage loans with constant monthly payments: (1) if you make a down payment of $100,000, you can obtain a loan with a 7.5% APR compounded monthly or (2) if you make a down payment of $200,000, you can obtain a loan with a 6.5% APR compounded monthly. What is the APR on the additional $100,000 borrowed on the first loan assuming both loans have none other fees and the borrower will pay off both loan in 300 months.

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Answer Heres how to compare the effective interest rate APR for the additional 100000 borrowed on th... View the full answer