What is the before tax effective cost of funds for a $200,000 loan at 5.50 percent interest, with monthly payments amortized over 20 years if the lender charges 3 points at origination and the borrower will incur $5,300 in third party loan costs? Assume the loan is outstanding for the full loan term which is five years. ○ 5.50% 6.94% ○ 7.43% 6.18%

What is the before tax effective cost of funds for a $200,000 loan at 5.50 percent interest, with monthly payments amortized over 20 years if the lender charges 3 points at origination and the borrower will incur $5,300 in third party loan costs? Assume the loan is outstanding for the full loan term which is five years. ○ 5.50% 6.94% ○ 7.43% 6.18%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 14P

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