A borrower took a mortgage loan 7 years ago for $160,000 at 10.25% interest for 30 years. He now wants to refinance the entire loan balance with a new loan at 9.0 % for 23 years. Origination fees and closing costs are $6,500 and is to be paid upfront with cash. If you consider this $6,500 cost as an investment, what is the return on such an investment if the borrower holds the new loan to maturity? 23.77% 17.85% 13.01% 15,39%
A borrower took a mortgage loan 7 years ago for $160,000 at 10.25% interest for 30 years. He now wants to refinance the entire loan balance with a new loan at 9.0 % for 23 years. Origination fees and closing costs are $6,500 and is to be paid upfront with cash. If you consider this $6,500 cost as an investment, what is the return on such an investment if the borrower holds the new loan to maturity? 23.77% 17.85% 13.01% 15,39%
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 14P
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