What is the effective borrowing cost

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Question - You bought a house with price of $500,000. Your LTV (loan-to-value ratio) is 80%. You choose the 30-year mortgage with interest rate 5%. Assuming the total transaction cost is $5,000. What is the effective borrowing cost if the loan will be prepaid at the end of 6 years?

a. 5.12%

b. 5%

c. 11.77%

d. 5.25%

Reference no: EM132788173

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