A borrower takes out a 30-year mortgage loan for $100,000 with an interest rate of 6% plus 2 points. What is the effective annual interest rate on the loan if the loan is carried for all 30 years

EAR = 6.4%

Explanation:

Loan amount = 100000

Mortgage rate = 6%

2 Points = 2% * 100000 = 2000

Years = 30

Monthly rate = 0.50%

No of period = 360

PMT = PMT[Rate, N, -Loan)

PMT = PMT(0.50%, 360, -100000)

PMT = 599.55

Net loan amount = 100,000 - 2,000 = $98,000

Monthly cost = Rate [N, PMT, Net loan]

Monthly cost = Rate[360, 599.55, -98000)

Monthly cost = 0.515790%

Effective annual rate = (1 + 0.515790%)^12 - 1

Effective annual rate = 1.00515790^12 - 1

Effective annual rate = 1.06368120129 - 1

Effective annual rate = 0.06368120129

Effective annual rate = 6.4%

support your answer using the data presented. (5 points). 4. based on the information you used to schedule and curve, which product would you recommend the shoe hut focus on, and why? provide details that support your answer. (5 points).