You have the option of buying a property or just leasing it, in the first case you must pay 20% of the property today and pay a mortgage loan for 20 years for 80% remaining, the credit has a cost of 6.0% in annual US cash, compounded monthly, Today the property has a value of 10,000 US and its value increases by 2% per year in real terms. In the case of leasing it, you must pay 75% of the value of the fee. Your rate discount is 5% in nominal terms. to. Question - 1  Calculate the discount rate that makes you indifferent between the two alternatives

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.