Given the following information about a fully amortizing loan, calculate the lender’s yield (rounded to the nearest tenth of a percent): loan amount: $166,950; term: 30 years; interest rate: 8%; monthly payment: $1,225.00; discount points: 2.

c. 8.5%

Explanation:

Note: The following is the missing part. Other Closing Expenses: $3,611.  A. 7.7% , B. 8.2%, C. 8.5%, D. 9.1%

Loan = $166,950

Rate = 8%

Life = 30 yrs

Period = 360

Installment = -1,225

Particulars                    Amount

Loan                              $166,950

Less: Discount points   $3339

Less: Closing costs       $3611

Net Borrowing              $160,000

Now, we find the Effective borrowing Rate with the aid of MS Excel

Effective borrowing Rate = Rate(Nper, PMT, PV)

Effective borrowing Rate = Rate(360, -1225, 160000)

Effective borrowing Rate = 0.007044637(Monthly)

Annual Effective rate = 0.007044637 * 12

Annual Effective rate = 0.084535644

Annual Effective rate = 8.4535644%

Annual Effective rate = 8.5%

answer; 20% is your answer;