1) Consider a $75,000, 30-year, fixed-rate mortgage with 7.75 percent interest and monthly payments. The lender...

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1) Consider a $75,000, 30-year, fixed-rate mortgage with 7.75 percent interest and monthly payments. The lender requires that the borrower pay two points to originate the loan. a) If the expected holding period is 30 years, what is the effective borrowing cost (EBC) on this loan? Two points=1500 Calculate payment first-N=360 PV=75000 I=7.75/12=0.65 CPT PMT=533.86 75000-1500-73500 N=360 PV=73500 PMT=533.86 CPT I=7.96 EBC=1,604,907.82 b) How does the EBC change if the expected holding period is 10 years? N=120 PV=75000 I=7.75/12=0.65 CPT PMT=894.30 75000-1500-73500 N=120 PV=73500 PMT=894.30 CPT I= 8.22 EBC=336,917.43 1) Consider a $75,000, 30-year, fixed-rate mortgage with 7.75 percent interest and monthly payments. The lender requires that the borrower pay two points to originate the loan. a) If the expected holding period is 30 years, what is the effective borrowing cost (EBC) on this loan? Two points=1500 Calculate payment first-N=360 PV=75000 I=7.75/12=0.65 CPT PMT=533.86 75000-1500-73500 N=360 PV=73500 PMT=533.86 CPT I=7.96 EBC=1,604,907.82 b) How does the EBC change if the expected holding period is 10 years? N=120 PV=75000 I=7.75/12=0.65 CPT PMT=894.30 75000-1500-73500 N=120 PV=73500 PMT=894.30 CPT I= 8.22 EBC=336,917.43

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a To calculate the effective borrowing cost EBC for the mortgage with a 30year expe... View the full answer