Please answer #2 only

Ed wants to buy a property for $320,000 and wants a CPM loan for 80%. A lender indicates the loan can be obtained for 30 years at 5.5% with an origination loan fee of $1,200 and 2 points.

1. How much will the lender actually disburse?

$249,680

2. What is the effective interest cost to the borrower, assuming that the mortgage is paid after 30 years?

a. 3.79%

b. 6%

c. 5.54%

d. 5.73%

e. 5.77%