Use the following information to answer the next 5 questions

Tom has a choice in borrowing money for a new house valued at $150,000. He can obtain an 80% LTV loan at 8% for 30 years with a 1% origination fee and one discount point, or he can obtain a 90% LTV loan at 8% for 30 years with a 1% origination fee, two discount points, and an up-front mortgage insurance premium of 0.5% of the loan amount plus an annual premium of 0.3% of the loan amount. Tom intends to sell the house in 8 years.

1. What is the net cash received by the borrower if he takes the 90% loan?

a. $130,275

b. $130,950

c. $134,325

d. $138,450

e. None of the above

2. What is the incremental monthly payment?

a. $110.06

b. $140.06

c. $143.81

d. $158.06

e. None of the above

3. What is incremental loan balance?

a. $11,536

b. $12,151

c. $13,653

d. $14,734

e. None of the above

4. What is the marginal cost of the additional funds?

a. 14.14%

b. 12.60%

c. 10.08%

d. 9.93%

e. None of the above