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What is the effective borrowing cost for loan

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A borrower would like to borrower $60,000 to finance a property for 30 years at 12% interest. He will only hold this investment for 5 years. The lender indicates that loan fees (origination and discount points) equal to 1.5% of the loan amount will be charged to obtain the loan. Additionally, there will be a 1.0% prepayment penalty. What is the effective borrowing cost for this loan?

Please fully explain the math and reasoning, Thankand how to do in excel as well.

Reference no: EM133076018

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