What is the real interest rate ibc on the additional 10000


You have a choice between two fully amortizing home loans … a $90,000, 13%, 25 year loan… and an $80,000, 12%, 25 year loan.

1. What is the real interest rate (IBC) on the additional $10,000 borrowed if you hold the loan until maturity.?

2. What if the loan is paid off at the end of the 5th year?

3. What if the lender charges 2 points on both loans and the loan is paid off at the end of the 5th yr.?

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Financial Management: What is the real interest rate ibc on the additional 10000
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