#2. You are offered a bullet loan of 250,000 at 6% for 36 months with 2...
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#2. You are offered a bullet loan of 250,000 at 6% for 36 months with 2 points. What is your expected financing cost expressed as an EAR assuming you make monthly interest only payments and repay the loan at month 36? If you choose to make payments of $2000 per month, and then repay the balance at month 36, what will your expected financing costs (expressed as EAR) be? Why are these different? #2. You are offered a bullet loan of 250,000 at 6% for 36 months with 2 points. What is your expected financing cost expressed as an EAR assuming you make monthly interest only payments and repay the loan at month 36? If you choose to make payments of $2000 per month, and then repay the balance at month 36, what will your expected financing costs (expressed as EAR) be? Why are these different?
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