Problem 4. You plan to purchase a house for $295,000 using a 30 year mortgage provided by a local bank. You will make a 20% down payment. You plan to pay off the mortgage 10 years from now. + The bank offers you two options for financing. Use the table below to determine which option you prefer: Option 1 Option 2 Mortgage rate 6.50% APR 6.30% APR Points 0 2 PMT Balance after 10 years PV of the difference between the payments until the mortgage is prepaid PV of the difference in the balance when the mortgage is prepaid Extra cost to get option 2 Which option should you choose? Answer here