Question: Hello, I need help answering this review question: Problem 2 Loan 1: $200,000 at 4.5% for 30 years, monthly payments, and no origination cost. APR

Hello, I need help answering this review question:

Problem 2

  • Loan 1: $200,000 at 4.5% for 30 years, monthly payments, and no origination cost. APR = 4.80%
  • Loan 2: $200,000 at 4.25% for 30 years, monthly payments, and no origination cost.

Questions:

  1. What is the discount point charged on Loan 1 assuming there is no cost associated with the origination?
  2. How many points must be charged on the 2ndloan to equalize the APR on the two loans?

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