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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Definitions:

Limited Merchandise Assortment

A retail strategy focusing on carrying only a specific set of products, aiming for efficiency and depth in selected categories.

Outlet Stores

Retail stores that sell merchandise directly from manufacturers at reduced prices, often offering overstocked items, returned goods, or products from past seasons.

Off-price Retailers

Retailers that sell branded goods at significant discounts off the suggested retail price, typically by purchasing overstocked or out-of-season items.

Wholesale Prices

The cost of goods sold in large quantities primarily to retailers, distributors, or other merchants, rather than to end consumers.