Contemporary Mathematics for Business & Consumers 8th Edition by Robert Brechner,Geroge Bergeman

تمرين 14

Larry and Cindy Lynden purchased a townhome in Alison Estates with an adjustable-rate mortgage. The lender's margin on the loan is 4.1%, and the overall rate cap is 5% over the life of the loan. The current index rate is the prime rate, 3.25%.
a. What is the calculated interest rate of the ARM
Calculated ARM interest rate = Index rate + Lender's margin

b. What is the maximum overall rate of the loan
Maximum overall ARM rate = Initial rate + Overall rate cap