1. You are considering purchase of a house that is currently being built. The list price of the house is $1,000,000. The builder of the house uses Needham Bank, a well-respected local bank. Needham bank offers a special innovative mortgage program, called Builder-to-buyer program, to a home buyer who purchases a newly built house of which the builders have a construction loan from the bank. If you buy the house, you are qualified for the Builder-to-buyer program.

   You are planning to take out a mortgage of a principal of $800,000 to finance the purchase. The mortgage market is competitive and the current market rate for 30-year fixed rate mortgage is 5%.

   Builder-to-buyer program from Needham bank offers a 1% interest rate reduction from the market mortgage rate. That means, if you borrow from Needham bank, the rate on your mortgage will be 4%, instead of 5%. What is the value of the Builder-to-buyer program?

   	a.	$88,530
   	b.	$99,547
   	c.	$77,513
   	d.	$45,680