Homework Answers
Using financial calculator
Step 1: Monthly payment
N=30*12=360
I/Y=5%/12
PV=-195000
FV=0
CPT PMT=$1,046.80
Step 2: Monthly rate
N=12*30
PMT=-1046.80
PV=195000*(1-3%)
FV=0
CPT I/Y=0.4391%
Step 3: Effective annual rate
=(1+0.4391%)^12-1
=5.3989%
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