The buyer of a piece of real estate is often given the option of buying down the loan. This option gives the buyer a choice of loan terms in which various combinations of interest rates and discount points are offered. The choice of how many points and what rate is optimal is often a matter of how long the buyer intends to keep the property.Darrell Frye is planning to buy an office building at a cost of $982,000. He must pay 10% down and has a choice of financing terms. He can select from a 9% 30-year loan and pay 4 discount points, a 9.25% 30-year loan and pay 3 discount points, or a 9.5% 30-year loan and pay 2 discount points. Darrell expects to hold the building for three years and then sell it. Except for the three rate and discount point combinations, all other costs of purchasing and selling are fixed and identical. (Round your answers to the nearest cent. Use this table, if necessary.) The given scenario involves a real estate purchase where the buyer, Darrell Frye, is interested in buying an office building costing $982,000. Darrell must pay a 10% down payment and has several financing options to choose from. The financing options differ based on combinations of interest rates and discount points, affecting his total financial outlay.### Financing Options:1. A 9% 30-year loan with 4 discount points.2. A 9.25% 30-year loan with 3 discount points.3. A 9.5% 30-year loan with 2 discount points.Darrell plans to hold the property for three years before selling it. Only the interest rates and discount points vary; all other purchasing and selling costs remain the same.### Questions:(a) **What is the amount being financed?** - Calculate by deducting the down payment from the total cost.(b) **If Darrell chooses the 4-point 9% loan, what will be his total outlay in points and payments after 36 months?**(c) **If Darrell chooses the 3-point 9.25% loan, what will be his total outlay in points and payments after 36 months?**(d) **If Darrell chooses the 2-point 9.5% loan, what will be his total outlay in points and payments after 36 months?**(e) **Of the three choices for a loan, which results in the lowest total outlay for Darrell after 36 months?** - Options: - The 4-point 9% loan - The 3-point 9.25% loan - The 2-point 9.5% loanThese calculations would involve understanding the impact of interest rates and discount points on the total payments over 36 months. A table might be required to calculate and compare the total costs for each option effectively. **Table 14-1: Monthly Payments to Amortize Principal and Interest per $1,000 Financed**This table provides the monthly payments necessary to amortize a loan of $1,000 over various interest rates and loan terms. The columns represent the loan term in years (ranging from 5 to 40 years), while the rows display different interest rates (from 3.50% to 13.00%). For each interest rate and loan term combination, the corresponding cell shows the monthly payment needed to pay off $1,000 of principal and interest.**Explanation of Use:**- **Interest Rate (%):** This is the annual interest rate applied to the loan amount.- **Years (5, 10, 15, 20, 25, 30, 35, 40):** These represent the duration of the loan in years.- **Monthly Payments:** The calculated payment amount needed each month to fully amortize the loan over the specified period.### Example Interpretation:- If the interest rate is 5.00% for a 15-year term, the monthly payment is $7.91 per $1,000 financed.- For a 30-year loan at a 7.50% interest rate, the monthly payment is $6.99 per $1,000 financed.This table is a helpful tool for financial planning, enabling users to assess how different interest rates and loan terms will impact their monthly obligations for loans.

Loan amount = $982,000 Down payment = 10% Financing terms 1. 9%-30 years - 4 points discount. 2. 9.25% 30-year loan and pay 3 discount points 3. 9.5% 30-year loan and pay 2 discount pointsPart a: Computation of amount being financed: Loan Amount = Cost of land ×1-Down payment = $982,000 ×1-10% = $982,000 ×0.90 = $883,800 Part b: Computation of payment after 36 months will be: Factor from the above table where the loan is 9%-30 years and 4 points discount Number of $1,000 financed = Loan amount$1,000=$883,800$1,000= $883.80 Monthly Payment = Number of $1,000 financed ×factor (9%,30 years) = $883.80 ×8.05 = $7,114.59 Amount Paid = Monthly Payment ×Number of months = $7,114.59×36 = $256,125.24 Discount Points = Loan Amount ×Discount rate = $883,800×4%=$35,352 Total Amount paid after 36 months = Amount paid + Discount points = $256,125.24 + $35,352 = $291,477.24Part c: Computation of payment after 36 months will be: Factor from the above table where the loan is 9.25%-30 years and 3 points discount Number of $1,000 financed = Loan amount$1,000=$883,800$1,000= $883.80 Monthly Payment = Number of $1,000 financed ×factor (9.25%,30 years) = $883.80 ×8.23 = $7,273.674 Amount Paid = Monthly Payment ×Number of months = $7,273.674×36 = $261,852.264 Discount Points = Loan Amount ×Discount rate = $883,800×3%=$26,514 Total Amount paid after 36 months = Amount paid + Discount points = $261,852.264 + $26,514 = $288,366.264Part d: Computation of payment after 36 months will be: Factor from the above table where the loan is 9.5%-30 years and 2 points discount Number of $1,000 financed = Loan amount$1,000=$883,800$1,000= $883.80 Monthly Payment = Number of $1,000 financed ×factor (9.5%,30 years) = $883.80 ×8.41 = $7,432.758 Amount Paid = Monthly Payment ×Number of months = $7,432.758×36 = $267,579.288 Discount Points = Loan Amount ×Discount rate = $883,800×2%=$17,676 Total Amount paid after 36 months = Amount paid + Discount points = $267,579.288 + $17,676 = $285,255.288Part e: The total outlay in points and payments after 36 months for 4 points 9% loan is $291,477.24. The total outlay in points and payments after 36 months for 3 points 9.15% loan is $288,366.26. The total outlay in points and payments after 36 months for the 2 points 9.5% loan is S285,255.29. Of the three choices for a loan, the payment is for 2 points 9.5% loan is lowest.