What is the incremental borrowing cost for the following table? Alternative 1 @ 6% for 25 years III @ 7% for 30 years Difference Loan Amount $80,000 $90,000 $10,000 Payments Years 1 - 25 -$515.44 -$598.77 -$83.33 Payments Years 26 - 30 $0 -$598.77 -$598.77

What is the incremental borrowing cost for the following table? Alternative 1 @ 6% for 25 years III @ 7% for 30 years Difference Loan Amount $80,000 $90,000 $10,000 Payments Years 1 - 25 -$515.44 -$598.77 -$83.33 Payments Years 26 - 30 $0 -$598.77 -$598.77

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

8th Edition

ISBN:9781285065137

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter5: Time Value Of Money

Section: Chapter Questions

Problem 41SP

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Question

Chapter 6 Discussion Q1
What is the incremental borrowing cost for the following table?
Alternative
1 @ 6% for 25 years
III @ 7% for 30 years
Difference
Loan Amount
$80,000
$90,000
$10,000
Payments Years
1 - 25
-$515.44
-$598.77
-$83.33
Payments Years
26 - 30
$0
-$598.77
-$598.77

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