Question

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.

Homework Answers

Answer #1

Original Loan amount is $185,000, Discount points is $2,500 and Other Closing Expenses $3,611.

So, Total Borrowing = $185,000 + $2,500 + $3,611

= $191,111.

Value of Total Borrowing is $191,111.

Monthly Payment on Total borrowing cost is calculated in excel and screen shot provided below:

Monthly Payment on Total borrowing cost is $1,303.71.

Original Loan amount is $185,000 and you have to pay $1,303.71 monthly for 30 year because of closing cost and Discount point. So, effective cost of borrowing is calculated in excel and screen shot provided below:

Effective monthly rate on loan is 0.63%.

Effective annual rate = [(1 + 0.63%) ^ 12] - 1

= 1.0785 - 1

= 7.85%

effective borrowing cost is 7.85%.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
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.
Solve using excel: A. Given the following information, calculate the balloon payment for a partially amortized...
Solve using excel: A. Given the following information, calculate the balloon payment for a partially amortized mortgage. Loan amount: $84,000, Term to maturity: 7 years, Amortization Term: 30 years, Interest rate: 4.5%, Monthly Payment: $425.62. 
 B. Given the following information about a fully amortizing loan, calculate the lender's yield (rounded to the nearest tenth of a percent). Loan amount: $166,950, Term: 30 years, Interest rate: 8 %, Monthly Payment: $1,225.00, Discount points: 2. C. Given the following information, calculate the...
Answer using excel: Please show how you do it   on excel with formulas! 1. Given the...
Answer using excel: Please show how you do it   on excel with formulas! 1. Given the following information, calculate the effective borrowing cost (rounded to the nearest tenth of a percent). Loan amount: $166,950, Term: 30 years, Interest rate: 8 %, Monthly Payment: $1,225.00, Discount points: 2, Other Closing Expenses: $3,611. 
 A. 7.7% B. 8.2% C. 8.5% D. 9.1% 2. Suppose a potential home buyer is interested in taking a $500,000 mortgage loan that has a term of 30 years...
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
Questions 20-21 are based on the following information Suppose that there is no origination cost. Given...
Questions 20-21 are based on the following information Suppose that there is no origination cost. Given the following information,                      Option A:                         Term: 30 years; Interest Rate: 5%; Discount Points: 0:                         Homeowner will move in 2 years                   Option B:                         Term: 30 years; Interest Rate: 5%; Discount Points: 1;                         Homeowner will stay in the house for over 30 years             Option C:                         Term: 30 years; Interest Rate: 5.05%                         Discount Points: 0; Homeowner...
Solve using excel: A. You have taken out a $225,000, 3/1 ARM. The initial rate of...
Solve using excel: A. You have taken out a $225,000, 3/1 ARM. The initial rate of 5.8% (annual) is locked in for 3 years and is expected to increase to 6.5% at the end of the lock period. Calculate the initial payment on the loan. (Note: the term on this 3/1 ARM is 30 years) 
 B. Given the following information, calculate the Effective Borrowing Cost (EBC). Loan amount: $175,000, Term: 30 years, Interest rate: 7 %, Payment: $1,164.28, Discount points:...
Given the following information, calculate the effective monthly rent payment: lease term: 10 years; concession: first...
Given the following information, calculate the effective monthly rent payment: lease term: 10 years; concession: first year free rent to be spread over the term of the lease; rental space: 5000 square feet; rental rate: $28.59 per square foot per year; landlord's discount rate: 10%; rents payments received at the beginning of each month.
Given the following information, calculate the effective monthly rent payment: lease term: 10 years; concession: one...
Given the following information, calculate the effective monthly rent payment: lease term: 10 years; concession: one year free rent to be spread over the term of the lease; rental space: 5000 square feet; rental rate: $20 per square foot per year; landlord's discount rate: 10%. the answer is $7,081, but I don't understand how to get it.
A mortgage is a loan used to purchase a home. It is usually paid back over...
A mortgage is a loan used to purchase a home. It is usually paid back over a period of 15, 20, or 30 years. The interest rate is determined by the term of the loan (the length of time to pay back the loan) and the credit rating of the person borrowing the money. Once a person signs the documents to borrow money for a home, they are presented with an amortization table or schedule for the mortgage that shows...
16. Given the following information, calculate the effective monthly rent payment: lease term: 10 years; concession:...
16. Given the following information, calculate the effective monthly rent payment: lease term: 10 years; concession: first year free rent to be spread over the term of the lease; rental space: 5000 square feet; rental rate: $28.59 per square foot per year; landlord's discount rate: 10%; rents payments received at the beginning of each month. A) $4,676 B) $5,901 C) $7,081 D) $10,122
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT