5. Suppose you have two options on a $175,000, 30-year, fixed-rate mortgage Option one is a 4.6259% contract rate with 2.00 points Option two is 4 25% contract rate but you have forgotten how many discount points are charged. Both loans have a 3% prepayment penalty. A (15 pts) Calculate the number of points on option two that would equalize the APRS of the two loans. Answer: B. (1.5 pts) Calculate the number of points on option two that would equalize the effective costs of the two loans over a five-year holding period. Answer 6. Suppose you take a 30 year fixed-rate mortgage for $150,000 at 6.00%, monthly payments with a two discount point rebate (negative discount points) to the borrower. Assume that you have no other financing fees. A. (1.5 pts) What is the APR of the loan? Answer: B. (1.5 pts) What is the effective cost with a five-year holding period? Answer