Question: Ann got a 30 year Fully Amortizing FRM for $1,000,000 at an annual interest rate of 6% compounded monthly, with monthly payments. After 5 years

  1. Ann got a 30 year Fully Amortizing FRM for $1,000,000 at an annual interest rate of 6% compounded monthly, with monthly payments. After 5 years of payments, Ann can refinance the balance into a 25 year Fully Amortizing FRM at an annual interest rate of 4% compounded monthly, with monthly payments. Refinancing will cost Ann 1 point and $1,500 in closing costs.

    If Ann refinances into this loan and makes payments for 25 years, what will be her annualized IRR from refinancing?

    A.

    10.03%
    B.

    120.36%
    C.

    130.05%
    D.

    113.09%

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