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801.25 1 pts Question 7 Assume you borrow an ARM of $120,000 for 30 years....

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801.25 1 pts Question 7 Assume you borrow an ARM of $120,000 for 30 years. Given initial interest rate=5%, margin-200 basis points, index rate at EOY1-6% EOY2-45%, an annual rate cap-250 basis points. If the lender charges 3% prepayment penalty AND 3 points upfront, what is the effective interest rate (EAR) If the loan is paid off at the end of year 37 Chint: use CF function to find IRR) 8.79% 9.25% 8.03% 8.30% Question 8 A house was purchased 5 years ago with a $250,000, 9%, 30-year loan. Thinking of refinancing, the borrower finds the interest rate on 25-year loan is 7.5%. What is the total savings (PV of all payment reductions) from the refinance if he show that forth

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