What is the before tax effective cost of funds for a $100,000 loan at 5.00 percent interest, with monthly payments amortized over 25 years if the lender charges 2 points at origination and the borrower will incur $2,700 in third party loan costs? Assume the loan is outstanding for the full loan term which is ten years.

1 5.00%

2 5.69%

3. 7.51%

4. 6.00%