Considering the following information, what is the benefit of refinancing the loan Expected holding period: 3 years Current loan balance: $100,000 Current loan interest: 7% Current loan mortgage payment: $908.33 Remaining term on current mortgage: 15 years New loan interest: 5.5% New loan mortgage payment: $817.08 New loan term: 15 years Cost of refinancing: $5,000 Assume that the opportunity cost is the interest rate on the new loan (5.5%).
Considering the following information, what is the benefit of refinancing the loan Expected holding period: 3 years Current loan balance: $100,000 Current loan interest: 7% Current loan mortgage payment: $908.33 Remaining term on current mortgage: 15 years New loan interest: 5.5% New loan mortgage payment: $817.08 New loan term: 15 years Cost of refinancing: $5,000 Assume that the opportunity cost is the interest rate on the new loan (5.5%).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ef 628.
![Considering the following information, what is the benefit of refinancing the loan?
Expected holding period: 3 years
Current loan balance: $100,000
Current loan interest: 7%
Current loan mortgage payment: $908.33
Remaining term on current mortgage: 15 years
New loan interest: 5.5%
New loan mortgage payment: $817.08
New loan term: 15 years
Cost of refinancing: $5,000
Assume that the opportunity cost is the interest rate on the new loan (5.5%).
-$2,025
-$5,000.00
$3,285
-$1.715](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc4a85354-e40b-4091-aa7c-927b8f28dfcb%2F7efb6aa6-8fa1-4336-9a8e-4bd9151d10a6%2Fthnkhd9_processed.png&w=3840&q=75)
Transcribed Image Text:Considering the following information, what is the benefit of refinancing the loan?
Expected holding period: 3 years
Current loan balance: $100,000
Current loan interest: 7%
Current loan mortgage payment: $908.33
Remaining term on current mortgage: 15 years
New loan interest: 5.5%
New loan mortgage payment: $817.08
New loan term: 15 years
Cost of refinancing: $5,000
Assume that the opportunity cost is the interest rate on the new loan (5.5%).
-$2,025
-$5,000.00
$3,285
-$1.715
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