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Previous Page Next Page Page 19 of 20 P5 incremental cost of borrowing Question 20 (14 points) A borrower is purchasing a property for $160,000

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Previous Page Next Page Page 19 of 20 P5 incremental cost of borrowing Question 20 (14 points) A borrower is purchasing a property for $160,000 and can choose between two possible loan alternatives. The first is a 90% loan for 25 years at 9% interest and 1 point and the second is a 95% loan for 25 years at 9.30% interest and 1 point. Assume the loan will be held to maturity. What is the incremental cost of borrowing the extra money? (9 pts.) Use the information in the above problem, except assume that the loan will be repaid in 6 years. What is the incremental cost of borrowing the extra money? (5 pts.) A/ Previous Page Next Page Page 19 of 20

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