Question: A borrower has a $ 4 0 0 , 0 0 0 loan at 7 . 7 0 % on a 3 0 - year

A borrower has a $400,000 loan at 7.70% on a 30-year amortization; after 7 years, the borrower has the option to refinance the loan at 7.10% with no prepayment penalty, but the origination costs will total $15,000. Calculate the rate of return on the refinance.

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