A mortgage for $200,000 with interest rate of 7.20%, fixed monthly payments, and term of 30 years was originated 10 years ago. If the loan's current balance is refinanced for the rest of the original term of at the rate of 6.30% with monthly payments, what is the implied annual savings rate given that the existing loan has a refinancing fee of 4% of the remaining balance at the time of refinancing and that loan is expected to be outstanding for 9 years? Selected Answer: Correct Answer: A. Below 6% E. Between 12% and 14%

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A mortgage for $200,000 with interest rate of 7.20%, fixed monthly payments, and term of 30 years was
originated 10 years ago. If the loan's current balance is refinanced for the rest of the original term of at the rate of
6.30% with monthly payments, what is the implied annual savings rate given that the existing loan has a
refinancing fee of 4% of the remaining balance at the time of refinancing and that loan is expected to be
outstanding for 9 years?
Selected Answer:
Below 6%
O A.
Correct Answer:
Е.
Between 12% and 14%
Transcribed Image Text:A mortgage for $200,000 with interest rate of 7.20%, fixed monthly payments, and term of 30 years was originated 10 years ago. If the loan's current balance is refinanced for the rest of the original term of at the rate of 6.30% with monthly payments, what is the implied annual savings rate given that the existing loan has a refinancing fee of 4% of the remaining balance at the time of refinancing and that loan is expected to be outstanding for 9 years? Selected Answer: Below 6% O A. Correct Answer: Е. Between 12% and 14%
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