Question: Question 5 When purchasing a $120,000 house, a borrower is comparing two loan alternatives. The first loan is a 90% loan at 12% for 25

Question 5 When purchasing a $120,000 house, a borrower is comparing two loan alternatives. The first loan is a 90% loan at 12% for 25 years. The second loan is an 85 loan for 10% over 15 years. Both have monthly payments and the property is expected to be held over the life of the loan. What is the incremental cost of borrowing the extra money (k-?)? (without financial calculator you cannot calculate the exact value so do not calculate the exact value but write the last formula to be able to calculate it) Your answer: 40 41 4% * PVIFA 412,180-1947 48 VIE 17 in) * 1 V|| " v khu 12000-105.86 CPVFA-103745 (PVIFA WIIVI 5000-102.91 "PIFA 1137APVIFUPI 000-15.15 VIFAA PIA 12000 (PIFANI111741 VIFAVIM Question 5 When purchasing a $120,000 house, a borrower is comparing two loan alternatives. The first loan is a 90% loan at 12% for 25 years. The second loan is an 85 loan for 10% over 15 years. Both have monthly payments and the property is expected to be held over the life of the loan. What is the incremental cost of borrowing the extra money (k-?)? (without financial calculator you cannot calculate the exact value so do not calculate the exact value but write the last formula to be able to calculate it) Your answer: 40 41 4% * PVIFA 412,180-1947 48 VIE 17 in) * 1 V|| " v khu 12000-105.86 CPVFA-103745 (PVIFA WIIVI 5000-102.91 "PIFA 1137APVIFUPI 000-15.15 VIFAA PIA 12000 (PIFANI111741 VIFAVIM

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