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A property is available for sale that could normally be financed with a fully amortizing $81,000 loan at a 10 percent rate with monthly payments

A property is available for sale that could normally be financed with a fully amortizing $81,000 loan at a 10 percent rate with monthly payments over a 25-year term. Payments would be $736.05 per month. The builder is offering buyers a mortgage that reduces the payments by 50 percent for the first year and 25 percent for the second year. After the second year, regular monthly payments of $736.05 would be made for the remainder of the loan term.

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a. How much would you expect the builder to have to give the bank to buy down the payments as indicated?

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