1.Since the payment amount is not given, calculate it (PMT) first. Use the given mortgage amount (PV = $60,000) and interest rate (I%YR = 111/2%).

2.To find the APR (the new I%YR), use the PMT calculated in step 1 and adjust the mortgage amount to reflect the points paid (PV = $60,000 － 2%). All other values remain the same (term is 30 years; no future value).

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Description:

If necessary, sets 12 payments per year and End mode.

Figures and stores number of payments.

Stores interest rate and amount of loan.

No balloon payment, so future value is zero.

Borrower’s monthly payment.

Stores actual amount of money received by borrower into PV.

Calculates APR.

Example: Loan from the Lender’s Point of View. A $1,000,000, 10-year, 12% (annual interest) interest-only loan has an origination fee of 3 points. What is the yield to the lender? Assume that monthly payments of interest are made. (Before figuring the yield, you must

194 14: Additional Examples

File name : 17BII-Plus-Manual-E-PRINT-030709

Print data : 2003/7/11