b) You bought a house a year ago for $250,000, borrowing $200,000 at quoted rate of 12% annual from TD bank, with semi-annual compounding, on a 25-year loan. Interest rates have since come down to 9%. You can refinance your mortgage at this new rate. i) How much are your monthly payments on your current loan (at 12%)? ii) How would your monthly payments change if you could refinance your mortgage at 9% (with a 24-year term loan)? iii) Suppose you kept your monthly payments at the original amount found above at 12%, but refinanced at 9%, how long would it take you to pay off your mortgage?
b) You bought a house a year ago for $250,000, borrowing $200,000 at quoted rate of 12% annual from TD bank, with semi-annual compounding, on a 25-year loan. Interest rates have since come down to 9%. You can refinance your mortgage at this new rate. i) How much are your monthly payments on your current loan (at 12%)? ii) How would your monthly payments change if you could refinance your mortgage at 9% (with a 24-year term loan)? iii) Suppose you kept your monthly payments at the original amount found above at 12%, but refinanced at 9%, how long would it take you to pay off your mortgage?
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
Problem 1PS
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b) You bought a house a year ago for $250,000, borrowing $200,000 at quoted rate of 12%
annual from TD bank, with semi-annual compounding, on a 25-year loan. Interest rates
have since come down to 9%. You can refinance your mortgage at this new rate.
i) How much are your monthly payments on your current loan (at 12%)?
ii) How would your monthly payments change if you could refinance your mortgage
at 9% (with a 24-year term loan)?
iii) Suppose you kept your monthly payments at the original amount found above at
12%, but refinanced at 9%, how long would it take you to pay off your mortgage?
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