You have just purchased a new warehouse. to finance the purchase, you've arranged for a 30-year mortgage loan for 80 percent of the $2,900,000 purchase price. the monthly payment on this loan will be $14,900. requirement 1: what is the apr on this loan?

We are asked to find the APR on this load.

Given:

Purchased price: $2,900,000

Monthly payment: 14,900

Amount borrowed: 0.80 ($2,900,000) = $2,320,000

Using the PVA equation:

PVA = $2,320,000 = $14,900 [{1-1 / (1+r) ]^360}/r]

r = 0.560%

APR is the monthly interest rate times the number in months of the year.

APR = 12 (.560) = 6.72%