What is the effective borrowing cost for loan

Assignment Help Financial Management

Reference no: EM13848294

A lender is offering a 30-year, fixed-rate, fully-amortizing mortgage loan at 8.25% interest with 2.75 discount points. What is the effective borrowing cost for this loan if the borrower prepays the loan at the end of year 5?

Reference no: EM13848294

Questions Cloud

What is the marginal value of an additional unit of labor : Consider a resource-based economy which can allocate labor (L) to harvest timber (T) or fish (F). Assume the economy faces constant world prices for timber and fish, denoted Pt and Pf, respectively. How should labor be allocated to timber and fish pr..

Recruit an agency force if everybody took your advice : After hearing the advice that it is usually best to buy life insurance from a person who has been in the business at least five years, a life insurance company general agent became upset and said rather vehemently, “How do you think we could recruit ..

Fully-amortizing-fixed-rate mortgage : You are 12 years into your fully-amortizing, 30-year, fixed-rate mortgage for $90,000. The loan has a 7-year reset provision. The initial interest rate on the loan is 6%. The reset rate is 8%. The loan required you to pay 3 discount points at origina..

Investors expect the annual future stock market return : Brodkey Shoes has a beta of 1.10, the T-bond rate is 5.5%. The annual return on the stock market during the past 3 years was 15.00%, but investors expect the annual future stock market return to be 14.00%. Based on the SML, what is the firm's require..

What is the effective borrowing cost for loan : A lender is offering a 30-year, fixed-rate, fully-amortizing mortgage loan at 8.25% interest with 2.75 discount points. What is the effective borrowing cost for this loan if the borrower prepays the loan at the end of year 5?

Required rate of return implied by current market price : The AZ Company currently has $1,000,000 in physical assets that have always generated a steady stream of earnings for the company. The management of the firm has always paid all of its earnings to shareholders as a dividend. What is the required rate..

Estimate the change in population on the time interval : Estimate the change in population on the time interval 0 ≤ t ≤ 20 years. Use 10 intervals, each lasting two years. Use rate of change data from the midpoint of each interval. Shade a matching area in your graph.

What is its nominal annual rate of return : Alcott's preferred stock pays a dividend of $1.00 per quarter. If the price of the stock is $55.00, what is its nominal (not effective) annual rate of return?

Mature manufacturing firm-reduce the payout : Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $12.15, but management expects to reduce the payout by 6 percent per year indefinitely. If you require a return of 10 percent on this stock, what will you pay for a sha..

User Account

All Pages