A Borrower Is Purchasing a Property for $180,000 and Can

question 32

Multiple Choice

A borrower is purchasing a property for $180,000 and can choose between two possible loan alternatives.The first is a 90% loan for 25 years at 9% interest and 1 point and the second is a 95% loan for 25 years at 9.25% interest and 1 point.Assuming the loan will be held to maturity,what is the incremental cost of borrowing the extra money?

• A)13.66%
• B)13.50%
• C)14.34%
• D)12.01%

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