An individual is borrowing $165,000 for a 25 year loan at 4.0% per year compounded monthly. Compute the monthly payment. Immediately after his 108th monthly payment he decides to refinance at a lower rate of 3% per year compounded monthly for 100 monthly payments. What would be his new monthly payment and how much interest will he save? Draw the cash flow diagrams.

Show your work with the formula you use to solve this problem.

Answer rating: 100% (QA)

To calculate the monthly payment for the initial loan of 165000 at 40 interest compounded monthly fo... View the full answer