Which loan has lowest total cost over the life of the loan

Assignment Help Engineering Mathematics

Reference no: EM131785236

Question: Many banks charge points on mortgage loans. Each point is the equivalent of a 1% charge on the amount borrowed and is paid before the loan is made as part of the closing costs of buying a home (closing costs include points, title fees, attorney's fees, assessor's fees, and so on).

(a) If $100,000 is borrowed for 25 years, for each of the following, find the payment size and the total paid over the life of the loan (including points).

(i) 7½%, compounded monthly, with 0 points

(ii) 7½%, compounded monthly, with 1 point

(iii) 7%, compounded monthly, with 2 points

(b) Which loan in part (a) has the lowest total cost over the life of the loan?

Reference no: EM131785236

Questions Cloud

Prepare a budgeted income statement : Rossi Company has the following projected account balances for June 30, 20X9: Prepare a budgeted income statement AND a budgeted balance sheet as of June 30

What is the cost of issuing the preferred shares : The preferred shares will result in after-tax underwriting expenses of $3 per share. What is the cost of issuing the preferred shares?

Issuance and cash paid at repurchase : What is the difference in cash received at issuance and cash paid at repurchase for the bond (rounded to the nearest thousand)?

Maximart sales wants to establish optimum ordering policy : The inventory manager of Maximart Sales wants to establish optimum ordering policy.

Which loan has lowest total cost over the life of the loan : Many banks charge points on mortgage loans. Each point is the equivalent of a 1% charge on the amount borrowed and is paid before the loan is made as part.

What one-year return should lpy ltd : The current risk-free rate in the market is 3% and the market requires a 6% risk premium for equity securities. What one-year return should LPY Ltd.

Low-cost sub-brand servicing short-haul routes in europe : The Aer Lingus Brand has just announced a new low-cost sub-brand servicing short-haul routes in Europe.

Calculate the cost of items completed in may : Problem - Comprehensive Problem, One Department. Calculate the cost of items completed in May and the cost of ending Work in Process

Social media is great opportunity to establish credibility : Social Media is a great opportunity to establish credibility, to gain support, and to network and build relationships"

User Account

All Pages