Rick Fox is purchasing a Mansion for 1million dollars. and has facilitated $800,000 financing package

from 3 different debt investors. (200,000 down payment from borrower)

• 500,000 will be financed by investor A @7%, 25yrs, secured by 1st mortgage
• 200,000 will be financed by investor B @7.5, 15yrs, secured by 2nd mortgage
• 100,000 will be financed by investor C @8%, 5yrs, secured by third mortgage

Compute the annual effective cost of this financing package

A. 8.45%

B. 7.15%

C. 15.15%

D. 4.35%

E. 43%

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