For this group of questions (10-15) I Ann is looking for a fully amortizing 30-year Fixed Rate Mortgage with monthly payments for $1,500,000. Mortgage A has a 7.05% interest rate and requires Ann to pay 1.5 points upfront. Mortgage B has a 9% interest rate and requires Ann to pay zero fees upfront. 10. Assuming Ann makes payments for 30 years, what is Ann's annualized IRR from mortgage A? 11. Assuming Ann makes payments for 30 years, what is Ann's annualized IRR from mortgage B? 12. Assuming Ann makes payments for 30 years, which mortgage has the lowest cost of borrowing (ie lowest annualized IRR)? Type 1 for A, type 2 for B 13. Assuming Ann makes payments for 2 years before she sells the house and pays the bank the balance, what is Ann's annualized IRR from mortgage A? 14. Assuming Ann makes payments for 2 years before she sells the house and pays the bank the balance, what is Ann's annualized IRR from mortgage B? 15. Assuming Ann makes payments for 2 years before she sells the house and pays the bank the balance, which mortgage has the lowest cost of borrowing (ie lowest annualized IRR)? Type 1 for A, type 2 for B.

For this group of questions (1015) Ann is looking for a fully amortizing 30-year Fixed Rate Mortgage with monthly payments for $1,500,000. Mortgage A has a 7.05% interest rate and requires Ann to pay 1.5 points upfront. Mortgage B has a 9% interest rate and requires Ann to pay zero fees upfiont. 10. Assuming Ann makes payments for 30 years, what is Ann's annualized IRR from mortgage A? 11. Assuming Ann makes payments for 30 years, what is Ann's annualized IRR from mortgage B? 12. Assuming Ann makes payments for 30 years, which mortgage has the lowest cost of borrowing (ie lowest annualized IRR)? Type 1 for A, type 2 for B 13. Assuming Ann makes payments for 2 years before she sells the house and pays the bank the balance, what is Ann's annualized IRR from mortgage A? 14. Assuming Ann makes payments for 2 years before she sells the house and pays the bank the balance, what is Ann's annualized IRR from mortgage B? 15. Assuming Ann makes payments for 2 years before she sells the house and pays the bank the balance, which mortgage has the lowest cost of borrowing (ie lowest annualized IRR)? Type 1 for A, type 2 for B