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(20 points) Colleen and Bill have a second mortgage of $100,000. They promise to pay the seller $100,000 plus all accrued interest 5 years from

(20 points) Colleen and Bill have a second mortgage of $100,000. They promise to pay the seller

$100,000 plus all accrued interest 5 years from now (balloon payment). The seller offers them

three interest options on the second mortgage:

a. 6% compounded annually

b. 5.5% compounded monthly

c. 5.25% compounded continuously

Which is the best option for Colleen and Bill (having to repay the loan)?

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