Some Home Loans Involve "Points," Which Are Fees Charged by the Lender.Each

question 75

Essay

Some home loans involve "points," which are fees charged by the lender.Each point charged means that the borrower must pay 1 percent of the loan amount as a fee.For example, if 0.5 point is charged on a $100,000 loan, the loan repayment schedule is calculated on the $100,000 loan, but the net amount the borrower receives is only $99,500.What is the effective annual interest rate charged on such a loan, assuming that loan repayment occurs over 360 months, and that the interest rate is 1 percent per month?

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Definitions:

Hypertension

A medical condition characterized by high blood pressure, which can lead to cardiovascular diseases if not managed.

Prenatal Development

The process of growth and development within the womb, from conception to the birth of a baby.

Embryonic Period

The stage in prenatal development from conception to the end of the eighth week, during which vital organs and structures begin to form.

Fetal Period

The stage of human development that takes place from the ninth week after fertilization until the birth of the baby, characterized by rapid growth and development of organs and structures.