Bud is offering a house for sale for $180,000 with an assumableloan which was made 5

years ago for $140,000 at 8.75% over 30 years. Kelsey isinterested in buying the

property and can make a $20,000 down payment. A second mortgagecan be obtained

for the balance at 12.5% for 25 years. What is the effectivecost of the combined loans,

if Kelsey would like to compare this financing alternative toobtaining a first mortgage for

the full amount?