LWB Investments owns a multifamily building in Denver, CO. They have recently decided to refinance their existing mortgage with a new loan with a contract term of 10 years and an amortization term of 30 years. The borrower will make monthly payments of principal and interest. The loan amount is equal to 75% of the estimated value of $10,000,000. LWB has negotiated a contract rate of 4.0% with loan points of 1%. Other loan costs are estimated at $40,000. LWB does not anticipate prepaying the loan before term.

Which of the following is the correct Effective Borrowing Cost?

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