Problem set # 7 1. Assume that you can get a home loan from your local cooperatively owned credit union. It is a $350,000 loan, but you must pay a $2000 not refundable processing fee, and you must purchase stock in the amount of $2000.00 which earns nothing (but you get it back at the end of the loan period). The annual interest rate offered would be 6.5%, and you would make MONTHLY payments for 15 years until the loan is paid off. a. Calculate the Monthly payment on the $350,000 loan at 6.5% annual interest 3048.8 b. What would be the period 0 cash flow (loan proceeds - the stock purchase - the processing fee). so,0oO Zoo 2000 c. What would be the final period cash flow (the final payment+ the stock back). d. Set the problem up in a spreadsheet and calculate the IRR of the cash flow stream. (be sure to convert it back to an annual rate and go to 4 places past the decimal) ,os o 2. Suppose you have another option of borrowing the $350,000 from a local bank. There is no stock purchase requirement, and no processing fee. The bank will loan you the money on a 15 year Monthly payment plan for 6.7% annual interest. Calculate the annual IRR of this cash flow stream. Which is the better deal (Bank or Credit Union), and why. TRR- 13