What is incremental cost of borrowing the additional funds

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A borrower can obtain an 80 percent loan at a 4.25% rate with monthly payments amortized over 30 years. Alternatively, he could obtain a 90 percent loan at a 5.75% rate with the same loan term but one point is charged on the 90% loan. the borrower plans to stay in the home fot the entire loan term.

What is the incremental cost of borrowing the additional funds? Assume a purchase price of $250,000 for the home.

Reference no: EM131087825

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