Problem
What would be the real cost of borrowed in following case? A home equity loan is advertised at 4% compounded annualy , however, there is a legal fee of $ 450 and appraisal fee of $350 to set up the house as collateral. If Sharon needs to borrow $30000 for one year,at which time will be able to repay the full amount, what is the effective rate of borrowing the $30000 for one year.