Question: There are $ 1 8 0 , 0 0 0 loan at 9 % for 2 0 years and a second mortgage for $ 4

There are $180,000 loan at 9% for 20 years and a second mortgage for $40,000 at 13% for 10 years. All loans require monthly payments and are fully amortizing. 5 points are charged for the second mortgage. Assume the borrower will own the property for 30 years. Compute the effective cost (%) of the combined loans.

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