Question
Suppose that you have two loan choices with monthly payments Choice Loan Amount Term (years) Interest Rate 1 $250,000 30 5% 2 $220,000 30 4.5%
Suppose that you have two loan choices with monthly payments
| Choice | Loan Amount | Term (years) | Interest Rate |
| 1 | $250,000 | 30 | 5% |
| 2 | $220,000 | 30 | 4.5% |
If the origination costs for loans 1 and 2 are $8,000 and $7,000, respectively and you hold the loan for only 5 years (60 months), what is the incremental borrowing cost for loan 1 over loan 2?
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CFIN
Authors: Scott Besley, Eugene Brigham
5th edition
1305661656, 9781305888036 , 978-1305666870
