Solved: Problem on fixed-rate mortgage loans, Financial Accounting

Problem on fixed-rate mortgage loans

Response to the following problem:

A borrower is faced with choosing between two $75,000, 30-year fixed-rate mortgage loans. The first loan has an interest rate of 6% with six points. The second loan has a rate of 7% with two points.

a) If the loan is repaid after 20 years, which is the better option? Show calculations to support your answer.

b) If the loan is repaid after 5 years, which is the better option? show calculations to support your answer.

How to calculate it in an excel spreadsheet please.

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Financial Accounting: Problem on fixed-rate mortgage loans

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Financial Accounting: Problem on fixed-rate mortgage loans

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