Question

Choose the correct answers. Sylvia Smith takes out a $85,000 mortgage. She paid 2.2% of the loan amount in closing costs and $7,200.35 in total interest the first year of the loan. What are Sylvia's closing costs? $ If the APR is (interest for one year plus closing costs) ÷ (amount financed), what was the APR for that year? % If the APR is (interest only for one year) ÷ (amount financed), what was the APR for that year? %

Answer 1

Hi there!

What are Sylvia's closing costs? $1870.00

If the APR is (interest for one year plus closing costs) ÷ (amount financed), what was the APR for that year?    10.7%
If the APR is (interest only for one year) ÷ (amount financed), what was the APR for that year?    8.5%
Your friend, ASIAX

Answer 2

Closing cost
0.022×85,000
=1,870

A) APR
(1,870+7,200.35)÷85,000
=0.10671*100=10.67%

B) APR
7,200.35÷85,000
=0.08471*100=8.47%