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Question 1 Local lenders are offering the following terms for a 30-year, fixed rate mortgage of $200,000. Contract interest rate (%) Discount points 8.25 2.75

Question 1 Local lenders are offering the following terms for a 30-year, fixed rate mortgage of $200,000. Contract interest rate (%) Discount points 8.25 2.75 8.5 2.00 8.75 1.00 a. Assume that you will keep the mortgage until the end of its term. What is the APR of each alternative? b. If you plan to sell your house after 5 years, what is the APR of each alternative?

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