Question: Suppose that 4 years ago you borrowed $200,000 using a 30-year fixed-rate mortgage with an interest rate of 8% per year with monthly payments and

Suppose that 4 years ago you borrowed $200,000 using a 30-year fixed-rate mortgage with an interest rate of 8% per year with monthly payments and compounding. What would the net present value of refinancing be if you can get an interest rate of 6% per year with monthly payments and compounding on a new 30-year mortgage and you assume that refinancing costs will be 4% of the new loan amount and you will pay off the new loan after 5 years of payments?

a. $7,547

b. $8,720

c. $7,882

d. $8,385

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

PowerPoint Assignment for BUS 401: Principles of Finance You have been asked by a manager in your organization to put together a training program explaining Net Present Value (NPV) and Future Value...

THE HIGHER A CAPITAL BUDGETING PROJECT'S NET PRESENT VALUE, THE HIGHER ITS IRR WILL BE. True False CONSIDER THE FOLLOWING CASH FLOWS: TIME CASH FLOW 0 0 1 120 2 250 3 430 4 520 5 ? WHEN THE DISCOUNT...

You are given with the following information of two proposals of financing programs for your home loan. Suppose the new house costs you $600,000 (sales taxes and others are included). One program is...

1 What are the main components of personal financial planning? Solve What is the purpose of a financial plan? Solve Identify some common actions taken to achieve financial goals. How does a job...

I need these four questions answered with explanations using the BAII Plus Calculator steps please. 1. Suppose that you have just borrowed $250,000 in the form of a 30 year mortgage. The loan has an...

Need help figuring out problem #40, #42, and #45 in the attached document. I have the answers for the problems, but need to see how they are worked out. FIN 142 - Real Estate Finance Problem Set 2 1....

Hello please answer to the following question. good luck 29. Annuities. You can buy a car that is advertised for $24,000 on the following terms: (a) pay $24,000 and receive a $2,000 rebate from the...

attention on 6-17 PART 1 238 the beginning, which is more common. What is the present value of the obligation? How much did the bank lose by allowing pay ments at the end of each year rather than at...

1. Suppose that you borrowed $200,000 in the form of a 30-year fixed-rate mortgage with an annual interest rate of 3% with monthly payments and monthly compounding. You must pay 2 points for this...

Suppose that five years ago you borrowed $500,000 using a 30-year fixed-rate mortgage with an annual interest rate of 7.00% with monthly payments and compounding. The interest rate on 30-year fixed-...

Recall from Chapter 13 that Hincapie Co. (a specialty bike-accessory manufacturer) is expecting growth in sales of some products targeted to the low-price market. Hincapie is contemplating a...

Gold Group has a consignment arrangement in which it sells gold coins through Fear Investment Corp. ( FIC ) . Gold Group agrees to reimburse FIC for any advertising costs and pay a 1 0 % commission....

US ergarizations spend about $ 8 betion annuaty on dversly waing However. no sludes that found that diversty raing, in fact, kads to mole cwersty overshy trairing can be conducted at a much lower...

=+3. Do differences in profitability exist within the different business models in the video game industry? State possible reasons?

=+3. Explain a few differences between the business models of the music publishing houses and the record producer.

=+1. Point out the range of services by means of an example of the video and computer game industry! Also distinguish between the online and offline range of services!