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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Question
If closing costs of $2,900 are associated with the refinance of a mortgage that would reduce the monthly payment from $1,010 to $919 refinance, it how many months to cover these costs. (Round your answer to the nearest full month.)
Expert Solution
Step 1
Time period to arrive at these costs can be calculated by using simple payback method:
Payback period = Initial amount/Net cash flow
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