Question 3 - EBC Calculations

Fill out the blank blue cells to compare the Effective Borrowing Cost (EBC) for the two loans in Question 3. Assume you will not hold the loans until maturity. If necessary, feel free to perform additional calculations off to the side in Excel.

3A. Calculate the payment, RMB, and EBC for both loans

3B. Which loan would you choose and why? (One or two sentences is sufficient)

Question 3: Hold for 8 years Months Loan amount Rate Points RMB Payment EBC Loan A 360 $787,500 3.85% 0.00% Loan B 360 $787,500 3.70% 2.00% Q3 Comment Question 3: Hold for 8 years Months Loan amount Rate Points RMB Payment EBC Loan A 360 $787,500 3.85% 0.00% Loan B 360 $787,500 3.70% 2.00% Q3 Comment