Some lenders charge an up-front fee on a loan, which is subtracted from what the borrower receives. This is typically described as "points" (where one point equals 1% of the loan amount). The federal government requires that this be accounted for in the APR that discloses the loan's cost.
(a) If the house is sold after 6 years and the loan is paid off, what is the effective interest rate and the APR?