Ayura is offered mortgage rates of 4.13% on a 15-year and 4.70% on a 30-year. She is able to make either payment and is buying a house with an initial loan balance of $245,000. Her lender is offering 1.5 discount points and she will pay $8,700 is third party expenses. If she is able to earn 10.9% investing in the S&P 500.

Then a. What is her monthly payment for each loan?

b. What is the lender's yield on each loan?

c. What is the effective borrowing cost of each loan?

d. Based on present value computations which loan is a better option for her?