What is the lender yield from this loan

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Question - Your bank has written a loan of $550,000 with an initial maturity of 25 years and an interest rate of 7.25% calculated monthly. As there are a variety of up-front costs associated with this loan, you have charged the borrower 1.5 points to cover these costs. You are expecting this loan to be paid out (prepayment) in 12 years, without any additional charges. Payments on this loan occur monthly. Allowing for the expected early repayment what is the lender's yield from this loan?

a. 7.82% per annum

b. 7.55% per annum

c. 7.46% per annum

d. 7.40% per annum

e. None of the above

Reference no: EM132919845

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