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PLEASE SHOW WORK Your bank offers the following options on a $100,000 mortgage: 1) A 15 -year, 4% loan with no points ii) A 15
PLEASE SHOW WORK
Your bank offers the following options on a $100,000 mortgage: 1) A 15 -year, 4% loan with no points ii) A 15 -year, 3.5% loar, with 1.5 discount points If you plan to repay the loan in five years, what is the present value of the savings from having a lower outstanding balance at the end of the 5 years if you choose the option with points? (Use the 3.5% interest rate to discount the savings). [Hint: you first need to compute the outstanding balance at the end of year 5 for each option] Multiple Choice $1,000 $64308 $76587 $76939 Step by Step Solution
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