Which scenario has the lower effective borrowing, Financial Management

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Which scenario has the lower effective borrowing

Given the following information, which scenario has the lower effective borrowing cost?

Option A:

Term- 30 years

Interest Rate- 7%

Discount Points- 0

Homeowner will move in 2 years

Option B:

Term- 30 years

Interest Rate- 7%

Discount Points- 1

Homeowner will stay for 30 years

A. option A

B. option B

C. both are equal

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Financial Management: Which scenario has the lower effective borrowing

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Financial Management: Which scenario has the lower effective borrowing

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