Answer:
EAR = 6.4%
Explanation:
Loan amount = 100000
Mortgage rate = 6%
2 Points = 2% * 100000 = 2000
Years = 30
Monthly rate = 0.50%
No of period = 360
PMT = PMT[Rate, N, -Loan)
PMT = PMT(0.50%, 360, -100000)
PMT = 599.55
Net loan amount = 100,000 - 2,000 = $98,000
Monthly cost = Rate [N, PMT, Net loan]
Monthly cost = Rate[360, 599.55, -98000)
Monthly cost = 0.515790%
Effective annual rate = (1 + 0.515790%)^12 - 1
Effective annual rate = 1.00515790^12 - 1
Effective annual rate = 1.06368120129 - 1
Effective annual rate = 0.06368120129
Effective annual rate = 6.4%
