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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%

Essentials Of Investments
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
Section: Chapter Questions
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A borrower tooka 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% O 17.85% 13.01% 15.39%
Transcribed Image Text:A borrower tooka 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% O 17.85% 13.01% 15.39%
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