1. A mortgage loan of $250,000 is made at an interest rate of 8% with monthly payments for 20 years.

a) What will be the monthly and annual debt service?

b) Show the distribution between interest and principal for years 1 through 5.

c) If the loan is repaid after 5 years, what is the lenders yield?

d) Suppose the lender charges $7,500 in origination fee and points. What is the effective borrowing cost (EBC) if the loan is repaid after 5 years?

e) Suppose the lender charges $7,500 in origination fee and points. What is the EBC if the loan is repaid after 3 years?

f) Suppose the lender charges $7,500 in origination fee and points and the loan is repaid after 3 years with a prepayment penalty of 3.5% of the outstanding balance. What is the EBC?