Question: A homeowner purchases a property for $1,000,000. She puts down 30% of the purchase price, and finances the rest with a 30-year, fully amortizing, graduated

A homeowner purchases a property for $1,000,000. She puts down 30% of the purchase price, and finances the rest with a 30-year, fully amortizing, graduated payment mortgage (GPM) carrying a 12% interest rate. The fees are 3% plus $20,000 and are financed.

A 25% rate of graduation will be applied to monthly payments beginning year 4 and the beginning of year 7, only (so, fixed for two three-year periods and then fixed for all years 7, 8, 9, ). She will sell the home at the end of year 10.

What is the effective cost of borrowing for the loan?

**Please show all work on excel / formulas**

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