Suppose that you are considering a loan in which you will borrow$245,000 using a 30-year loan. The loan has an annual interest rateof 6% with monthly payments and monthly compounding. Suppose alsothat the lender is charging you a 0.75% origination fee, you arepaying 2.25 points in order to get the 6% interest rate, and theloan has $1,275 in third-party closing costs associated withit.
*** I NEED TO KNOW HOW TO SOLVE THIS ON A CALCULATOR. IAM USING A HP-10B2+
a. What will the effective borrowing cost be for this loan ifyou make all of the scheduled payment?
b. What will the lender’s yield be for this loan if you make allof the scheduled payments?
c. What will the effective borrowing cost be for this loan ifyou pay off the loan at the end of the 7th year?
