Effective Obligations for Loans

For the two loans below, determine the amount of the effective obligation to the borrower for each loan,

and indicate which is better for a borrower with a 18 percent opportunity cost:

----Loan A----

Amount: $200,000

Term: 15 years

Interest rate: 3.6 percent

Expected holding period: 10 years

Cost of origination: 5 percent of loan

----Loan B----

Amount: $200,000

Term: 30 years

Interest Rate: 4.0 percent

Expected Holding Period: 10 years

Cost of origination: 5 percent of loan

Effective obligation of A _____________________

Effective obligation of B _____________________

Best choice for borrower: ____________________

Any help would be appreciated! Thank you.