Question

The actual prepayment penalty under the terms of the apartment building owner’s mortgage is 2% of the balance of the loan. If the owner goes ahead with the refinancing, what was the effective interest rate on the loan over the original ten years?

Answer 1

Answer: The actual prepayment penalty under the terms of the apartment building owner’s mortgage is 2% of the balance of the loan. If the owner goes ahead with the refinancing, what was the effective interest rate on the loan over the original ten years?

Explanation: It is actually 12 years