Question

What is the Effective Borrowing Cost (EBC) of a 30-Year $240,000 FRM Loan with a Contract...

What is the Effective Borrowing Cost (EBC) of a 30-Year $240,000 FRM Loan with a Contract Interest Rate of 6.00% w/ $4,000 in Closing Costs if the borrower prepays in 3 years? Please indicate your answer as an annual percentage with two digits right of the decimal, or 0.0342 --> 3.42.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Effective cost of borrowing= 6.64%

Calculation as below:

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What is the incremental borrowing cost of $30,000 if a lender is willing to offer a...
What is the incremental borrowing cost of $30,000 if a lender is willing to offer a $240,000 30-year FRM Loan at 3.48%, or a $270,000 30-year FRM Loan at 3.96%? Assume monthly payments, no origination fees, no prepayment, and the loan fully amortizes. Please indicate your answer as an annual percentage with two digits right of the decimal, or 0.0644 --> 6.44.
On the following loan, what is the best estimate of the effective borrowing cost if the...
On the following loan, what is the best estimate of the effective borrowing cost if the loan is prepaid in six years? Loan: $100,000 Interest rate: 7 percent Term: 180 months Up-front costs: 7 percent of loan amount Please solve using BA II plus
You are a lender and have offered a borrower a $400,000 30-year fixed-rate mortgage loan at...
You are a lender and have offered a borrower a $400,000 30-year fixed-rate mortgage loan at 4.68% with monthly payments and fully amortize. The loan does not have any origination fees, but does have a 2% prepayment penalty during the loan's first 5 years. What is the ANNUAL PERCENTAGE RATE (APR) of the loan that you as the lender are required to disclose to the borrower at the time of origination given the borrower anticipate they will prepay the loan...
Given the following information, calculate the effective borrowing cost (rounded to the nearest tenth of a...
Given the following information, calculate the effective borrowing cost (rounded to the nearest tenth of a percent). Loan amount: $185,000 Term: 30 years, Interest rate: 7.25%, Monthly Payment: $1,262.00, Discount points: $2,500 and Other Closing Expenses: $3,611.
Edit question Given the following information, calculate the effective borrowing cost (rounded to the nearest tenth...
Edit question Given the following information, calculate the effective borrowing cost (rounded to the nearest tenth of a percent). Loan amount: $185,000 Term: 30 years, Interest rate: 7.25%, Monthly Payment: $1,262.00, Discount points: $2,500 and Other Closing Expenses: $3,611.
You are a lender and have offered a borrower a $400,000 30-year fixed-rate mortgage loan at...
You are a lender and have offered a borrower a $400,000 30-year fixed-rate mortgage loan at 4.68% with monthly payments and fully amortize. The loan does not have any origination fees, but does have a 2% prepayment penalty during the loan's first 5 years. What would be the size of the prepayment penalty if the borrower repaid all remaining principal after the 46th payment? Please indicate your answer with two spaces right of the decimal.
A 30 year loan of $100, 000 is taken out at effective annual interest i =...
A 30 year loan of $100, 000 is taken out at effective annual interest i = 4%. For the first 20 years you pay 130% of interest, while for the last 10 years you pay constant payments X. Find X.
A borrower made a mortgage loan 7 years ago for $160,000 at 10.25% interest for 30...
A borrower made a mortgage loan 7 years ago for $160,000 at 10.25% interest for 30 years and is considering refinancing. The loan balance is now $151,806.62 and rates for this amount are currently 9.0% for 23 years. Origination fees and closing costs are $4,500 and these costs are not financed by the lender. What is the effective cost of refinancing? Potential Gross Income 100,000 sq. ft for the coming year average rent $15.00 per ft. $   1,500,000 Less Vacancy...
On January 1st 2015, DL Corp. signed a 5-year $30 million loan contract with Bank of...
On January 1st 2015, DL Corp. signed a 5-year $30 million loan contract with Bank of Fisher with annual interest rate of 8%. The loan will be automatically rolled over unless either party opts out. The corporate tax rate is 35% till the end of 2017. Starting from January 1st 2018, the corporate tax rate is lowered to 21%. Assuming the lending relationship is stable, what is the present value on January 1st 2015 of the tax shield effect from...
Today, Malorie takes out a 20-year loan of $200,000, with a fixed interest rate of 5.0%...
Today, Malorie takes out a 20-year loan of $200,000, with a fixed interest rate of 5.0% per annum compounding monthly for the first 3 years. Afterwards, the loan will revert to the market interest rate. Malorie will make monthly repayments over the next 20 years, the first of which is exactly one month from today. The bank calculates her current monthly repayments assuming the fixed interest rate of 5.0% will stay the same over the coming 20 years. (c) Calculate...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT