Incremental cost of borrowing the extra money


A borrower is purchasing a property for $180,000 and can choose between two possible loan alternatives. The first is a 90% loan for 25 years at 9% interest and 1 point and the second is a 95% loan for 25 years at 9.25% interest and 1 point. Assume the loan will be held to maturity, what is the incremental cost of borrowing the extra money.

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Finance Basics: Incremental cost of borrowing the extra money
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