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A homeowner could take out a 30-year mortgage at a 8% annual rate on a $500,000 mortgage, or she could finance the purchase with a

A homeowner could take out a 30-year mortgage at a 8% annual rate on a $500,000 mortgage, or she could finance the purchase with a 30-year mortgage at a 7.8% annual rate with 2% discount points. Which mortgage is a better deal? Will your answer change if the holding period is 15 years? Show the dollar cost/savings.

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