Question

The loan balance is now $151,806.62 and rates for this a mount are currently 9.0% for...

The loan balance is now $151,806.62 and rates for this a mount are currently 9.0% for 23 years. Origination fees and closing costs are $4,500 and closing costs are not financed by the lender. What is the ef fective cost of refinancing?

(A) 9.00%

(B) 10.85%

(C) 15.32%

(D) 9.39%

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The correct answer is option D i.e. (D) 9.39%

Step 1- Calculate the monthly payment for the mortgage loan i.e.

using pmt function of excel =pmt(rate,npr,pv)

rate = 9%/12 = 0.0075

npr = 23x12 = 276

pv = -(151806.62+4500) = -156306.62

PMT = $1343.09

Montlhy payment of mortgage loan is $1343.09

Step 2- Calculate monthly effective cost of refinancing

using rate function of exct = rate(npr,pmt,pv)

npr=23*12 = 276

Pmt = -1343.09

pv = 151806.62

Rate = 0.782%

Step 3- yearly effective cost of refinancing = 0.782% x 12 =9.384% or say 9.39%

For further clarrification Please comment

Please ThumbsUp ! Thank You.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
. A borrower made a mortgage loan 7 years ago for $160,000 at 10.25% interest for...
. A borrower made a mortgage loan 7 years ago for $160,000 at 10.25% interest for 30 years. The loan balance is now $151,806.62 and rates for this a mount are currently 9.0% for 23 years. Origination fees and closing costs are $4,500 and closing costs are not financed by the lender. What is the ef fective cost of refinancing? (A) 9.00% (B) 10.85% (C) 15.32% (D) 9.39%
A borrower made a mortgage loan 7 years ago for $160,000 at 10.25% interest for 30...
A borrower made a mortgage loan 7 years ago for $160,000 at 10.25% interest for 30 years and is considering refinancing. The loan balance is now $151,806.62 and rates for this amount are currently 9.0% for 23 years. Origination fees and closing costs are $4,500 and these costs are not financed by the lender. What is the effective cost of refinancing? Potential Gross Income 100,000 sq. ft for the coming year average rent $15.00 per ft. $   1,500,000 Less Vacancy...
Sarah would like to purchase a condo in Vancouver. She currently rents an apartment for $4,500...
Sarah would like to purchase a condo in Vancouver. She currently rents an apartment for $4,500 per month. The condo she is looking at costs $1,600,000. She intends to put $300,000 down. The condo has monthly condo fees of $300/month, property taxes of $200/month and repairs of $100/month. She can obtain a 30-year mortgage for 3% per year compounded monthly. There are the following closing costs at purchase: Land transfer tax $20,000 Legal fees $1,500 There are the following closing...
John is considering an adjustable rate mortgage loan with the following characteristics: • Loan amount: $400,000...
John is considering an adjustable rate mortgage loan with the following characteristics: • Loan amount: $400,000 • Term: 30 years • Index: one year T-Bill • Margin: 2% • Periodic cap: 2% • Lifetime cap: none • Negative amortization: not allowed • Financing costs: 1% origination fee and 2 points.   The Treasury bill yield is 4% at the outset and is expected to increase to 6% at the beginning of the second year and to 11% at the beginning of...
You have been hired as a risk manager for Acorn Savings and Loan.​ Currently, Acorn's balance...
You have been hired as a risk manager for Acorn Savings and Loan.​ Currently, Acorn's balance sheet is as follows​ (in millions of​ dollars): Assets Liabilities Cash reserves 49.8 Checking and savings 79.5 Auto loans 98.1 Certificates of deposit 101.3 Mortgages 147.2 ​Long-term financing 94.8 Total Assets 295.1 Total liabilities 275.6 ​Owner's equity 19.5 Total liabilities and equity 295.1 When you analyze the duration of​ loans, you find that the duration of the auto loans is 2.1 ​years, while the...
The remaining Application Exercises deal with purchasing a house. Assume that you are currently renting an...
The remaining Application Exercises deal with purchasing a house. Assume that you are currently renting an apartment for $1,040 per month and you have been considering buying a house. You have saved $10,000 towards a down payment for the house. A salesperson informs you that he has a new house for sale, where the house and land were independently appraised at $200,000, but are being sold by the builderatadiscountpriceof $185,000.Thebuilderwantstogetridofthepropertyquicklybecausethehouseisthelastonetobesoldinthedevelopmentand the builder is moving on to construction of a new...
Multiple Choice 9. Banks see a decrease in the value of its bond and loan portfolios...
Multiple Choice 9. Banks see a decrease in the value of its bond and loan portfolios when interest rates: A. decrease. B. increase. C. either increase or decrease. 10. Since the corona virus hit the U.S. in March, the stock market, as represented by the Dow Jones Industrial Average, is currently down approximately: A. 15% B. 30% C. 40% D. 50% 11. The risks that banks see the value of its bonds and loan portfolios when interest rates: A. decrease....
PLEASE ANSWER C!!! Bob & Betty Homebuyers want to make an offer on this property at...
PLEASE ANSWER C!!! Bob & Betty Homebuyers want to make an offer on this property at the list price. Bob earns $48,000 per year and Betty earns $54,000 per year. They have very good credit. Their monthly payments are $200 for student loans, $350 for their car payment and minimum credit card payment of $50. They have savings of $125,000. The balance of their student loans is $40,000. Insurance on this house will cost them $900 per year. Property taxes...
  The following balance sheet and income statement should be used for questions #1 through #6: Kuipers,...
  The following balance sheet and income statement should be used for questions #1 through #6: Kuipers, Inc. 2001 Income Statement (OMR in millions) Net sales 9,625 Less: Cost of goods sold 5,225 Less: Depreciation 1,890 Earnings before interest and taxes 2,510 Less: Interest paid 850 Taxable income 1,660 Less: Taxes 581 Net income 1,079 Addition to retained earnings 679 Dividends paid 400 Kuipers, Inc. 12/31/00 and 12/31/01 Balance Sheet (in OMR, in millions) 2000 2001 2000 2001 Cash 1,455 260...
QUESTION 11 Mutual funds that carefully select stocks and bonds--relying on smart managers' skills--generally outperform passive,...
QUESTION 11 Mutual funds that carefully select stocks and bonds--relying on smart managers' skills--generally outperform passive, index funds, even though they charge higher fees. True False 5 points    QUESTION 12 If you wanted to buy shares of common stock in IBM, what market would you make a purchase in? New York Stock Exchange S&P 500 Tokyo Stock Exchange Nasdaq 5 points    QUESTION 13 All else equal, an adjustable rate mortgage is riskier to the borrower than a fixed...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT