1. Assume you buy a home and borrow $125,000 at 6.4% for 20 years. You pay a total of $6,238 for origination fee, points, and mortgage insurance. In addition you pay other loan costs of $2,182. You pay the first year s hazard insurance premium of $385 and are required to deposit $295 into an escrow account. What is the reportable APR?
a. 7.05%
b. 7.30%
c. 7.34%
d. 7.37%
2. You buy a wedding gown for $2,999, plus sales tax of 7.5%. The retailer finances the entire amount (including the sales tax) for 3 years and says you will be charged 12% interest. However, the retailer uses the add-on method. Calculate your monthly payment.
a. $121.79
b. $107.08
c. $99.61
d. $106.02