You are starting to have second thoughts about moving. After going back and forth for several weeks
Question:
You are starting to have second thoughts about moving. After going back and forth for several weeks you decide that you will make a decision based on whether or not you will refinance the house. If you refinance you will stay, if you don’t you will move. You can refinance the home with a new interest rate of 3.75% for a 30 year term. You will refinance on the same day you would have closed on the home (so you can use the outstanding loan balance you calculated in #11 here). The cost of refinancing is 4.8% of the loan amount. Assume you anticipate selling the home (or refinancing again) in 7 years.
1.What is the net benefit of refinancing? Round to two decimal places. *Hint you are solving for net benefitof refinancing, not solving for NPV (so you do not need a discount rate to answer this question).
2.Will you be moving to Costa Rica?
Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates