Bank A $235,000 20-year fixed 4.375% Bank B $235,000 20-year fixed 4.7% 1.75 discount points 0 discount points M=$1,470.92 M = $1,512.22 What is the break-even point for the loans? O about 5 years about 8 years O about 6 years O about 7 years

Bank A $235,000 20-year fixed 4.375% Bank B $235,000 20-year fixed 4.7% 1.75 discount points 0 discount points M=$1,470.92 M = $1,512.22 What is the break-even point for the loans? O about 5 years about 8 years O about 6 years O about 7 years

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 4P: Gifts Galore Inc. borrowed 1.5 million from National City Bank. The loan was made at a simple annual...

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

A3)

Bank A
$235,000
20-year fixed
4.375%
Bank B
$235,000
20-year fixed
4.7%
1.75 discount points 0 discount points
M=$1,470.92
M=$1.512.22
What is the break-even point for the loans?
O about 5 years
O about 8 years
about 6 years
about 7 years

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