The Bank issued a home mortgage of $160,000 at 8.70% repayable monthly over 25 years.Today the bank received payment number 125 and, as a result, the Bank properly records the loan's book value equal to the outstanding balance.

In order to raise cash, however, the Bank intends to sell the loan for the highest price it can get.The selling price of the loan, its market value, is set so that the loan offers the buyer a rate of return equal to 9.70% ; this is slightly greater than the prevailing interest rate on new and similar loans.How does the loan's book value compare to its market value?

a.The loan's market value is $112,739and its book value is $106,480

b.The loan's market value is $112,739and its book value is $122,452

c.The loan's market value is $129,650and its book value is $122,452

d.The loan's market value is $129,650and its book value is $106,480

e.The loan's market value is $98,034and its book value is $106,480