15. Ms. Dillon takes out a mortgage loan for the amount of $200,000 at a contract...
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15. Ms. Dillon takes out a mortgage loan for the amount of $200,000 at a contract interest rate of 5.25% with monthly payments over 20 years. a) What is the before-tax cost of borrowing if the loan is held to maturity? b) What is the after-tax cost of borrowing if the loan is held to maturity and Ms. Dillon is in the 15% marginal tax bracket? 30% marginal tax bracket? c) Suppose the loan is repaid at the end of the 3rd year. What is the before-tax cost of borrowing? d) Suppose the lender charges $2,000 in points. What is the before-tax EBC if the borrower repays the loan at the end of the 5th year? What is the after-tax EBC if Ms. Dillon is in the 15% tax bracket? e) If the lender charges $2,00o in points, what is the annual percentage rate (APR) that he must disclose to Ms. Dillon? 15. Ms. Dillon takes out a mortgage loan for the amount of $200,000 at a contract interest rate of 5.25% with monthly payments over 20 years. a) What is the before-tax cost of borrowing if the loan is held to maturity? b) What is the after-tax cost of borrowing if the loan is held to maturity and Ms. Dillon is in the 15% marginal tax bracket? 30% marginal tax bracket? c) Suppose the loan is repaid at the end of the 3rd year. What is the before-tax cost of borrowing? d) Suppose the lender charges $2,000 in points. What is the before-tax EBC if the borrower repays the loan at the end of the 5th year? What is the after-tax EBC if Ms. Dillon is in the 15% tax bracket? e) If the lender charges $2,00o in points, what is the annual percentage rate (APR) that he must disclose to Ms. Dillon?
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Date Page Loan Amount 200000 Interxt Rete 525 Ans Montly Boosowing Cost 200000 ... View the full answer
Related Book For
Statistical Reasoning for Everyday Life
ISBN: 978-0321817624
4th edition
Authors: Jeff Bennett, Bill Briggs, Mario F. Triola
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