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Effective annual interest rate on additional amount borrowed

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Please give the process of calculation

You are in escrow to buy a house for 1,200,000. You have a closing of two 30 yr fully amortizing mortgage loans with monthly payments 1. If you make a 10% down payment you can obtain a loan with a 6% annual interest rate or 2 if you make a 20% down payment you can obtain a loan with a 5% annual interest rate. What is the effective annual interest rate on the additional amount borrowed if you take the first loan?

Reference no: EM131752638

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