I CAN ONLY USE A FINANCIAL CALCULATOR FOR A SIMILAR PROBLEM ON TEST.

You borrow a full-amortized mortgage of $200,000 at 5% mortgage rate for 20 years with

monthly payments.

1. Assume that you paid 2 points to get the loan, what is the effective cost (mortgage rate)

a. 5.54

b. 5.24

c. 5.13

d. 5.45

2. Assume that you paid 2 points to get the loan, what is the effective cost if you pay off your loan after 3

years

a. 5.76

b. 5.52

c. 5.89

d. 5.61

3. Assume that you prepay $20,000 after 3 years, and the loan terms does not change (same monthly

payment), how long (months) do you need to paid off the mortgage.

a. 170.9

b. 179.9

c. 182.3

d. 198.6