E-Click loans will make a 30 year, fully amortizing mortgage loan with monthly payments, with either no points at an interest rate of 8% OR two points and an interest rate of 7.75%.

If you plan on borrowing $200,000, which loan provides the lowest effective interest rate if you are going to hold the loan for (a) 30 years and (b) 7 years?Highlight your final answers.

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