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%

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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