I would like to purchase a vacation house in the mountains of Colorado, where we like to go periodically. We would need to borrow approximately $395,000.00 to make the deal. We can get a loan from a local Credit Union. It would be a $395,000 loan, but we must pay a $2000 not refundable processing fee, and we must purchase stock in the amount of $1,500.00 which earns nothing (but we get it back at the end of the loan period) In addition, we would also incur a $2,500 not refundable appraisal fee (all of these would be withheld from the loan proceeds). The annual interest rate offered would be 4.35%, and we would make MONTHLY payments for 15 years until the loan is paid off.

1. What would be the final period cash flow (the final payment the stock back)

2. Set the problem up in a spreadsheet and calculate the IRR of the cash flow stream. be sure to convert it back to an annual rate and go to 4 places past the decimal)