Question: For the following question, please show your work. Every number you get, show how you got it. And please make everything as clear as possible.

For the following question, please show your work. Every number you get, show how you got it. And please make everything as clear as possible. Thanks in advance.

1. What is the effective interest rate of the following loan? Set up the IRR formula using summation notation. (20 pts)

Loan amount: $125,000 Term: 30 years Discount Points: 5 Payments: Monthly Interest Rate: 6% (annual)

2. What is the outstanding balance on the following loan after the borrower has made 12.5 years of payments? (For full credit, calculate manually and show all of your work.) (20 pts)

Loan amount: $300,000 Term: 25 years Discount Points: 5 Payments: Monthly Interest Rate: 4.5% (annual)

3. Calculate the effective annual interest rate on the following loan? Set up the IRR formula using summation notation. (20 pts)

Loan amount: $100,000 Term: 10 years Discount Points: 2 Payments: Annual Interest Rate: 7% (annual)

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