Question: Can you please explain how you get question #7 and how to solve it on a financial calculator. The answer is B (A) Contract interest

Can you please explain how you get question #7 and how to solve it on a financial calculator. The answer is B

(A) Contract interest rate Incremental borrowing cost O Market interest rate (D) Discount rate Mr. Tramp made a mortgage 5 years ago for $85,000 at 8.25% interest and a 15 year term. Rates have now risen 10% for an equivalent loan. Mr. Tramp's lender is willing to discount the loan by $2,000 if he will to would Mr. Tramp receive by prepaying the loan? prepay the loan. What rate of return 7. (A) 10.24% (B) 8.95% (C) 14.32% (D) 9.14% 8. Which of the following statements about the loan in the question above are TRUE? (A) (A) The market loan is higher than the book value ofihe loan because the market rate of value of the interest than the interest rate on the loan the market rate of (B) The market value the loan is lower than the book value of the loan because interest is lower than the interest rate on the loan (G) The market value of the loan is higher than the book value of the loan because the market rate of

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