tim just agreed to borrow $1 million to afford his dream home using a 30...
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tim just agreed to borrow $1 million to afford his dream home using a 30 year principal and interest (P&I) loan, paid monthly in arrears as is normal. he were offered a rate of:
2.4% pa compounded monthly by Stop Bank that required lots of documentation to prove your income and expenses, and a rate of;
3.6% pa compounded monthly by best Bank that required almost no documentation and was a pleasure to deal with.
tim agreed to the more expensive rate loan with Loose Bank since he couldn't be bothered to gather the documentation, even though it would have only taken a moment. What was the net present value (NPV) of your decision to borrow using the more expensive interest rate compared to the cheaper one?
Select one:
a.
-$142,317.49
b.
-$165,932.60
c.
-$232,934.34
d.
-$256,448.81
e.
-$360,000.00
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