A local mortgage broker has arranged a mortgage loan with a face value of $77,500, which included

Question:

A local mortgage broker has arranged a mortgage loan with a face value of $77,500, which included a finder’s fee of $2500. The loan is to be amortized by monthly payments over 20 years at 7% compounded semiannually. What is the actual cost of borrowing, expressed as an effective annual rate, if the contractual interest rate is for
a. A three-year term?
b. A seven-year term?
c. The entire 20-year amortization period?

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