Vivian has a fixed rate CPM of $410,000 that will be fully amortized over 30 years...

Vivian has a fixed rate CPM of $410,000 that will be fully amortized over 30 years through monthly payments. The mortgage rate is 14.00%, and there is a 4 points loan discount fee (on initial mortgage loan amount) and 2.7000% prepayment penalty (on loan balance outstanding at the time of prepayment) charged by the banker. Vivian is planning to prepay the mortgage at the end of 5 years. What is Vivian’s effective (All-In) borrowing cost (% rounded to two decimal places)? [Round the monthly interest rates in decimal to six decimal places, the monthly payments to two decimal places, the loan balances to zero decimal places]

Expert Solution

All-in effective borrowing cost (annualized)= 15.518875%

Calculation as below:

jeff jeffy answered 3 years ago

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