Please help! Answer is not 13.8! I asked this question before, and answerer was
ID: 2790900 • Letter: P
Question
Please help! Answer is not 13.8!
I asked this question before, and answerer was incorrect.
You are looking at a one-year loan of $14,000. The interest rate is quoted as 9.8 percent plus four points. A point on a loan is simply 1 percent (one percentage point) of the loan amount. Quotes similar to this one are common with home mortgages. The interest rate quotation in this example requires the borrower to pay four points to the lender up front and repay the loan later with 9.8 percent interest What rate would you actually be paying here? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Interest rate 13.8 3 %Explanation / Answer
loan amount received at start after paying 4 points=14000-14000*4%=13440
interest rate=((14000*(1+9.8%))/13440)-1
=14.38%
the above is the answer