Question
In: Finance
A borrower is purchasing a property for $725,000 and can choose between two possible loan alternatives....
A borrower is purchasing a property for $725,000 and can choose between two possible loan alternatives. The first is 85% LTV loan for 30 years at 3.5% interest and 1 point and the second is at 70% LTV loan for 30 years at 2.875% interest and no points. Assuming the loan will be held until maturity, what is the incremental cost of borrowing the extra money?
A) 6.14%
B) 6.7%
C)6.33%
D)7.74%
Solutions
jeff jeffy answered 2 years agoRelated Solutions
A borrower is purchasing a property for $725,000 and can choose between two possible loan alternatives....
A borrower is purchasing a property for $725,000 and can choose
between two possible loan alternatives. The first is an 85% loan
for 30 years at 3.5% interest and 1 point and the second is a 70%
loan for 30 years at 2.875% interest and no points. Assuming the
loan will be repaid in 5 years, what is the incremental cost of
borrowing the extra money?
A. 6.14%
B. 6.7%
C. 6.33%
D. 7.74%
A borrower is purchasing a property for $180,000 and can choose between two possible loan alternatives....
A borrower is purchasing a property for $180,000 and can choose
between two possible loan alternatives. The first is a 80% loan for
25 years at 8% interest and 1 point and the second is a 95% loan
for 25 years at 9.25% interest and 2 points. Assuming the loan will
be held to maturity, what is the incremental cost of borrowing the
extra money?
20) A borrower is purchasing a property for $180,000 and can choose between two possible loan...
20) 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 repaid in 5 years, what is the
incremental cost of borrowing the extra money? A) 13.95% B) 13.67%
C) 14.42% D) 12.39%.
I know the answer is...
When purchasing a $260,000 house, a borrower is comparing two loan alternatives. The first loan is...
When purchasing a $260,000 house, a borrower is comparing two
loan alternatives. The first loan is a 90% loan at 8.5% for 25
years. The second loan is an 85% loan for 7.75% over 15 years. Both
have monthly payments and the property is expected to be held over
the life of the loan. What is the incremental cost of borrowing the
extra money?
When purchasing a $260,000 house, a borrower is comparing two loan alternatives. The first loan is...
When purchasing a $260,000 house, a borrower is comparing two
loan alternatives. The first loan is a 90% loan at 8.5% for 25
years. The second loan is an 85% loan for 7.75% over 15 years. Both
have monthly payments and the property is expected to be held over
the life of the loan. What is the incremental cost of borrowing the
extra money?
could you please show the work
A property costs $225,000. A borrower can obtain an 80% loan with an 10% interest rate...
A property costs $225,000. A borrower can obtain an 80% loan
with an 10% interest rate and monthly payments. The loan is to be
fully amortized over 20 years. Alternatively he could obtain a 90%
loan at an 10.25% interest rate with the same loan term. The
borrower plans to own the property for the entire loan term. What
is the incremental cost of borrowing the additional funds?
A property costs $100,000. A borrower can obtain an 80% loan with an 8% interest rate...
A property costs $100,000. A borrower can obtain an 80% loan
with an 8% interest rate and monthly payments. The loan is to be
fully amortized over 25 years. Alternatively he could obtain a 90%
loan at an 8.5% interest rate with the same loan term. (annualize
percentages)
A. The borrower plans to own the property for the entire loan
term. What is the incremental cost of borrowing the additional
funds?
B. How would your answer change if two points...
A borrower is faced with choosing between two loans. Loan A is available for $75,000 at...
A borrower is faced with choosing between two loans. Loan A is
available for $75,000 at 6.5% interest for 30 years, with 3% loan
origination fee. Loan B would be made for the same amount, but for
7% interest for 30 years, with 0.5% loan origination fee. Both
loans will be fully amortizing.
a) If the loan is repaid after 20 years, which loan would be the
better choice?
b) If the loan is repaid after 5 years, which loan...
SHOW CLEAR WORK ON EXCEL A borrower is faced with choosing between two loans. Loan A...
SHOW CLEAR WORK ON EXCEL
A borrower is faced with choosing between two loans. Loan A is
available for $75,000 at 6 percent interest for 30 years, with 6
points to be included in closing costs. Loan B would be made for
the same amount, but for 7 percent interest for 30 years, with 2
points to be included in the closing costs. Both loans will be
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Mowasalat is considering between two alternatives for purchasing sensors to improve the monitoring of transport services...
Mowasalat is considering between two alternatives for
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Alternative 1: Purchase sensors at a cost of 30 QAR per unit
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Alternative 2: It can manufacture the sensors locally at 20
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30,000 QAR per year over the study period...
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