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You are looking at a one-year loan of $10,000. The interest rate is quoted as...

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Finance

You are looking at a one-year loan of $10,000. The interest rate is quoted as 10 percent plus 2 points. A pointon 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 2 points to the lender up front and repay the loan later with 10 percent interest.

Required :
What rate would you actually be paying here?

rev: 09_17_2012

11.02%

7.80%

12.24%

10.00%

13.47%

Answer & Explanation Solved by verified expert
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