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 Loan B Amount: $200,000 $200,000 Term: 30 years 15 years Interest rate: 5.5 percent 5.0 percent Expected holding period: 8 years 8 years Cost of origination: 5 percent 5 percent

Effective cost of A______________________

Effective cost of B______________________

Best choice for borrower:_________________