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Expected prepayment horizon

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As a borrower, you have the option to choose between two 30-year, monthly-payment loans: 7% interest rate with 3 points, versus 7.5% interest with one-half point. (a) Which loan option would you choose if you had a 10-year expected prepayment horizon? (b) Which would you choose if you expect to pay off this loan in 5 years?

Reference no: EM131713072

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