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Incremental cost of borrowing the additional funds

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A borrower can obtain an $80,000 loan at an 8 percent interest rate with monthly payments amortized over 25 years. Alternatively, he could obtain a $90,000 loan at an 8.5 percent rate with the same loan term. The borrower plans to stay in the home for the entire loan term. What is the incremental cost of borrowing the additional funds (expressed in decimals, rounded to three digits)?

Reference no: EM133115458

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