You are offered loans from two competing lenders on the purchase of a $6.5 million property for a 5-year term (25-year amortization). Assume that payments are made ANNUALLY. The terms are outlined below: Loan 1 Loan 2 LTV Rate 62.5% 70.0% 6.375% 6.875% Fees (total) $55,000 $77,000 Calculate the incremental cost for the extra funds provided by loan 2. Hint: Remember that the loan will not be outstanding a full 25 years. ENTER YOUR ANSWER AS A DECIMAL WITH 4 PLACES. IF YOUR ANSWER
You are offered loans from two competing lenders on the purchase of a $6.5 million property for a 5-year term (25-year amortization). Assume that payments are made ANNUALLY. The terms are outlined below: Loan 1 Loan 2 LTV Rate 62.5% 70.0% 6.375% 6.875% Fees (total) $55,000 $77,000 Calculate the incremental cost for the extra funds provided by loan 2. Hint: Remember that the loan will not be outstanding a full 25 years. ENTER YOUR ANSWER AS A DECIMAL WITH 4 PLACES. IF YOUR ANSWER
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 18P
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Question
![You are offered loans from two competing lenders on the purchase of a $6.5
million property for a 5-year term (25-year amortization). Assume that payments
are made ANNUALLY. The terms are outlined below:
Loan 1
Loan 2
LTV
62.5%
70.0%
Rate
6.375%
6.875%
Fees (total)
$55,000
$77,000
Calculate the incremental cost for the extra funds provided by loan 2. Hint:
Remember that the loan will not be outstanding a full 25 years.
ENTER YOUR ANSWER AS A DECIMAL WITH 4 PLACES. IF YOUR ANSWER](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe7e080c7-71f4-40a8-8612-383b003e56d4%2F4e400a3b-52e6-40c7-9998-1d9a6c573609%2F35nd36_processed.png&w=3840&q=75)
Transcribed Image Text:You are offered loans from two competing lenders on the purchase of a $6.5
million property for a 5-year term (25-year amortization). Assume that payments
are made ANNUALLY. The terms are outlined below:
Loan 1
Loan 2
LTV
62.5%
70.0%
Rate
6.375%
6.875%
Fees (total)
$55,000
$77,000
Calculate the incremental cost for the extra funds provided by loan 2. Hint:
Remember that the loan will not be outstanding a full 25 years.
ENTER YOUR ANSWER AS A DECIMAL WITH 4 PLACES. IF YOUR ANSWER
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