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Comparison Rate Calculation

  1. Apr 2, 2013 #1
    Hi guys,

    Just doing a few calculations on a homeloan and comparison rate calculation has got me stumped.
    Loan Amount: $320,000
    Loan Time: 30 years
    Interest Rate:5.55%
    Initial Costs:$4463
    Monthly Fee: $15

    So from this, with a fortnightly compounding frequency, I calculate the total amount I will pay back is $673,616.12 (as a present value). So how can I work out the comparison rate from this data?

    Thanks
     
  2. jcsd
  3. Apr 2, 2013 #2
    There are different types of comparison rate.

    I assume you mean APR (which I believe is just the % rate per year over the course of the loan term)

    If we knew that the APR was say 15% on an initial amount of £3000 over 10 years then Id do

    3000 * (1.15)^10 = 12,136

    Now, you have some of these figures in your example and youre missing the APR. Set up the equation and solve it numerically
     
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