Computing the total cost for loan

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Reference no: EM1336807

Option A
You can purchase a new building within the city limits for $525,000.
The city will offer a special incentive reducing the price by $25,000.
The city will finance the building over a period of 20 years at a 5.25% APR
Should you pay the loan off 5 years early the city will rebate you an additional 10% of the purchase price

Option B
A local builder has agreed to build to your specs for a cost of $475,000.
A local bank has agreed to finance the project for 15 years at a 4.95%APR
There is no early payoff bonus with the bank.

Compute the payments for each option.
Compute the total cost for each loan and calculate based on paying off option A in 15 years.
Calculate an investment based on paying both loans in 15 years and invest the difference in the two loans in a 5 year CD paying 3.00%.

Create a logical statement saying either yes or no. Set the statement to based the yes or no on the lowest payment that you calculate.

Reference no: EM1336807

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