You must give financial advice to a client who wants to apply for a mortgage...
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You must give financial advice to a client who wants to apply for a mortgage loan. She wants to buy a flat worth $ 2,500. She has the option of applying for credit at two banks. Banco Alpha offers him an effective annual interest rate of 3.9% for a 20-year term. Banco Beta offers you an effective annual interest rate of 4.1% for a 30-year term. Both banks finance a maximum of 80% of the value of the property. Your client earns a monthly salary equivalent to $ 44. The policy in both banks is that, to pre-approve the loan, the dividend to be paid must correspond to a maximum of 25% of the monthly salary. Calculate for each alternative the respective nominal annual rate, the monthly dividend, and the total interest you would pay. Finally, which bank would you suggest to your client?
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