Suppose that you have two loan choices with monthly payments Choice Loan Amount Term (years) Interest Rate 1 $ 250,000 30 5% 2 $ 220,000 30 4.50% A) What is the annual incremental...

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Finance

Suppose that you havetwo loan choices with monthly payments
Choice LoanAmount Term(years) InterestRate
1 $250,000 30 5%
2 $ 220,000 30 4.50%
A) What is the annual incremental borrowing cost forloan 1 over loan 2 if you hold the loan for the entire term,assuming there is no origination cost associated with theloans?
3.34%
5.34%
8.34%
10.34%
B) If the origination costs for loans 1 and 2 are $3,500 and$2,500 respectively, and you hold the loan for 6 years (72 months),what is annual incremental borrowing cost of loan 1 overloan 2?
5.29%
10.29%
8.55%
9.29%

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Suppose that you havetwo loan choices with monthly paymentsChoiceLoanAmountTerm(years)InterestRate1$250,000305%2$ 220,000304.50%A) What is the annual incremental borrowing cost forloan 1 over loan 2 if you hold the loan for the entire term,assuming there is no origination cost associated with theloans?3.34%5.34%8.34%10.34%B) If the origination costs for loans 1 and 2 are $3,500 and$2,500 respectively, and you hold the loan for 6 years (72 months),what is annual incremental borrowing cost of loan 1 overloan 2?5.29%10.29%8.55%9.29%

Choice	LoanAmount	Term(years)	InterestRate
1	$250,000	30	5%
2	$ 220,000	30	4.50%