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A bank has agreed to lend you $524,000 for a home loan. The loan will be...

A bank has agreed to lend you $524,000 for a home loan. The loan will be fully amortized over 40 years at 5.33%, with .58 points. The loan payments will be monthly. The closing cost is estimated to be $2,579 and you plan to refinance the mortgage in 6 years. Calculate the actuarial rate.

a. 0.4620%

b. 1.4588%

c. 0.3776%

d. 0.7799%

e. None of the answers are correct

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Answer #1

APR = (2*Number of payments per year * Total finance charges) / (Original loan proceeds *Total number of payments+1)

As per finance calculator using the APR should be are as follows:

The APR is 5.3703%

Therefore, the answer should be none of the answers are correct.

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