Answer to Question #55796 in Other Economics for Antornette Love
Mary borrows $80,000 to buy her home. Beginning next month she will pay the lener $720 per month for the next 20 years. What is the ROR? (Hiint: 20 years = 240 months. Calculate the monthly interest rate first, then multiply by 12 to obtain the annual percentage rate, APR). Express the interest rate as an integer. For example, for 6%, enter 6.
Investment = $80,000, payments = $720 per month for the next 20 years. ROR = (Sum of payments - Investment)/Investment = 92,800/80,000 = 1.16, so the return is 16%