1. Leslie and Ben are interested in a $250,000 fully amortizing loan and are deciding between 2 options, mortgage A and mortgage B

Mortgage A	Mortgage B
Loan term: 30 years Annual interest rate: 5.75 % Monthly payments Up-front financing costs: $4,500 Discount points: 2.5	Loan term: 15-years Annual interest rate: 5.25 % Monthly payments Up-front financing costs: $7,500 Discount points: 2.5

a. Calculate the monthly payments for mortgage A and B.

b. Calculate the effective borrowing cost for or mortgage A and B.

c. Calculate Lenders Yield for or mortgage A and B

d. Suppose you are the borrower. Based on the effective borrowing costs, which loan would you choose? Explain your answer in 1-2 sentences.

e. Suppose you are the lender. Based on the lenders yield, which loan would you prefer? Explain your answer in 1-2 sentences.