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An investor plans to buy a property. She has two options for loans: (1) Loan balance=10, maturity=10 years, interest rate=1%; (2) Loan balance=20, maturity=10 years,
An investor plans to buy a property. She has two options for loans: (1) Loan balance=10, maturity=10 years, interest rate=1%; (2) Loan balance=20, maturity=10 years, interest rate=2%. The incremental (or marginal) borrowing cost by choosing the option (2), instead of the option (1), is approximately x%. Calculate the value of x.
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