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A borrower is making a choice between a mortgage with monthly payments or biweekly payments. The loan will be $240,000 at 6 percent interest for 20 years.

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Required:

a. What would be the maturity period if payments are bi-weekly? How much will the borrower pay in total under each payment option? Which choice would be less costly to the borrower?

Maturity period Years
Total monthly payments 412,664.29
Total bi-weekly payments
Choice of borrower Bi-weekly payment

b. Assume that the bi-weekly loan was available for 5.75%. What would be the maturity period if payments are bi-weekly? How much will the borrower pay in total under each payment option?

Maturity period years
Total monthly payments
Total bi-weekly payments
Choice of borrower Bi-weekly payment

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