FINANCE 3321-A house is for sale for $200,000
Question # 00557454
Posted By:
Updated on: 07/06/2017 07:40 AM Due on: 07/06/2017
A house is for sale for $200,000. You have a choice of two 20-year mortgage loans with monthly payments: (1) if you make a down payment of $50,000, you can obtain a loan with a 7% rate of interest or (2) if you make a down payment of $100,000, you can obtain a loan with a 5% rate of interest. What is the effective annual rate of interest (in percent) on the additional $50,000 borrowed on the first loan (i.e. what is the incremental borrowing cost)?
-
Rating:
/5
Solution: FINANCE 3321-A house is for sale for $200,000