Question

ABC Bank made a loan to XYZ, Inc. at a rate of 5.04%, compounded monthly, payable in equal monthly payments over a 15 year period. This resulted in a loan payment of $1,585.76, the first payment of which occurred one month after the loan was issued. XYZ, Inc. made payments over a period of 7 years and decided to refinance the loan because of lower interest rates. Assume the refinance was based on the remaining 8 years of the loan at an interest rare of 3.96%, compounded monthly. To make the refinance worthwhile, the most XYZ, Inc. should pay for the refinance charges is closest to ...

(Assume all refinance charges are paid at the time of the refinance. At a minumum, factor values should be carried out to 5 decimal places.)

(please show all work and dont use an excel. Thank you)

Answer 1