To demonstrate the marginal or incremental cost of borrowing, please consider the following. For the purchase of a $100,000 house, two loans can be considered. One Loan of $80,000 for 25 years at 6% and another loan for $90,000 for 25 years at 7%. Please calculate the incremental cost to acquire the or additional cost of $10,000 should he choose the $90,000 loan over the $80,000 loan. What are the monthly payments on each of the loans? Consider the payment amount difference. We are solving for the annual rate of interest compounded monthly that makes the present value of the difference in mortgage payments equal to $10,000. What would it cost on a percentage basis to Borrower the additional $10,000? What alternatives would the Borrower have to taking the higher mortgage loan? What is the LTV on the $90,000 mortgage and what is the LTV on the $80,0000 mortgage?