Ann got a 30 year Fully Amortizing FRM for $1,000,000 at an annual interest rate of 7% compounded monthly, with monthly payments. After 5 years of payments, Ann can refinance the balance into a 25 year Fully Amortizing FRM at an annual interest rate of 6% compounded monthly, with monthly payments. Refinancing will cost Ann 1 point and $1,500 in closing costs. If Ann refinances into this loan after 5 years, what will be her total cost of refinancing? A) $1,500.00 B) $9,413.16 C) $10,000.00 D) $10,913.16 ANSWER: D

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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Ann got a 30 year Fully Amortizing FRM for $1,000,000 at an annual interest rate of 7% compounded
monthly, with monthly payments.
After 5 years of payments, Ann can refinance the balance into a 25 year Fully Amortizing FRM at an
annual interest rate of 6% compounded monthly, with monthly payments.
Refinancing will cost Ann 1 point and $1,500 in closing costs.
If Ann refinances into this loan after 5 years, what will be her total cost of refinancing?
A)
$1,500.00
B)
$9,413.16
C) $10,000.00
D) $10,913.16
ANSWER: D
Transcribed Image Text:Ann got a 30 year Fully Amortizing FRM for $1,000,000 at an annual interest rate of 7% compounded monthly, with monthly payments. After 5 years of payments, Ann can refinance the balance into a 25 year Fully Amortizing FRM at an annual interest rate of 6% compounded monthly, with monthly payments. Refinancing will cost Ann 1 point and $1,500 in closing costs. If Ann refinances into this loan after 5 years, what will be her total cost of refinancing? A) $1,500.00 B) $9,413.16 C) $10,000.00 D) $10,913.16 ANSWER: D
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