Question
Suppose that you are purchasing a house (loan amount = $200,000) and inquire about the terms for a 30-year fixed-rate mortgage. LOAN A: annual interest
Suppose that you are purchasing a house (loan amount = $200,000) and inquire about the terms for a 30-year fixed-rate mortgage.
LOAN A:
- annual interest rate of 3.75% with monthly payments and compounding
- no discount points
- origination fee of 0.75%
- $928 in third-party closing costs
What is the Effective Borrowing Cost for loan A assuming no prepayment?
What is the EBC for the loan if we prepay at the end of the third year?
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Fundamentals Of Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
13th Edition
1265553602, 978-1265553609
