Given the following information,calculate the effective borrowing cost (EBC).Loan amount: $166,950,Term: 30 years,Interest rate: 8 %,Payment: $1,225.00,Discount points: 2,Other Closing Expenses: $3,611.

Question

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The effective borrowing cost (EBC) considers the interest rate, discount points, and other closing costs. The EBC is higher than the nominal interest rate due to these additional costs. Calculating the EBC involves adjusting the loan amount for the discount points and closing costs, then determining the interest rate that equates the adjusted loan amount to the present value of the loan payments. In this case, the EBC is approximately 8.5%.

Given the Following Information,calculate the Effective Borrowing Cost (EBC)