Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:Consider a 2-year, fixed rate mortgage with an original balance of $28,000 and
an interest rate of 4.7%. Suppose right after the month 10 payment has been
made, the interest rate declines by 2%. What would be the new monthly
payment if the home-owner were to refinance with a new 2-year loan at the
new rate?
Round your answer to 2 decimal places (nearest cent).
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- You buy a house for $230000, and take out a 30-year mortgage at 6% interest. For simplicity, assume that interest compounds continuously. A) What will be your annual mortgage payment? $ per year %24arrow_forwardA borrower made a constant payment mortgage loan 8 years ago for $400,000 at 12 percent interest for 30 years. 1. What is the monthly payment? 2. What is the current loan balance? 3. Assume this is homeowner has been offered a chance for refinance for the amount at the current balance for 22 years at 10.5% interest rate. What is the monthly payment if the homeowner chooses to refinance? 4. If the origination fees and closing costs are $25,500, and the costs are not financed by the lender. What is the effective cost of refinancing? Should this homeowner refinance? 5. If this homeowner plans to sell the house in 5 years, should this homeowner refinance (show your answer with the effective annual rate)? use excel to get the answers and show the formulasarrow_forwardIf you could pay for your mortgage forever, how much would you have to pay per month for a $1,000,000 mortgage, at a 6.5% annual interest rate? Work out the answer (a) if the 6.5% is a bank APR quote and (b) if the 6.5% is a true effective annual rate of return.arrow_forward
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