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You are offered the following two mortgages to finance your home ($ 225,000):

• An interest of 6.75% per annum compounded monthly, closing costs of $ 15,000 and you have to pay an account insurance of 95 dollars per month.

• An annual interest of 7.00% compounded biweekly (24 payments per year), closing costs of $ 10,000 and you do not have to pay insurance. The loan is for 15 years. to. Calculate the net interest of each offer (remember that the net interest covers interest, insurance and closing costs). b. Calculate the effective net interest for each capital flow. c. What is the best alternative?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92830210

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