Computing the monthly interest rate

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Reference no: EM1345608

You are taking out a 100,000 mortgage loan to be repaid over 25 years in 300 monthly payments
a) if the interest rate is 16% per year what is the amount of the monthly payment?
Answer: PMT = 1,358.89
b) if you can afford to pay 1500 per month and need to borrow 100,000 how many months would it take to pay off the mortgage?

Answer: n = 166

c) if you can pay 1500 per month, need to borrow 100000, and want a 25 year mortgage, what is the highest interest rate you can pay?
Answer: i= 1.482% per mo.

What does the below mean?

- Do not round off the interest rate when computing the monthly rate, or you will not get the same answer reported here.

- You must input PMT and PV with opposite signs.

Reference no: EM1345608

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