The Reynolds are thinking of refinancing their house. The plan to live in the house for the next five years. Refinancing will cost $3,000. They make their house payments at the end of each year. refinancing will reduce their payments by $800. The alternative use of the $3,000, instead of refinancing, is a savings account that pays 8 percent. The present value factor for five years, at 8 percent is 3.993. What is the net present value benefit of refinancing? O $1,000 O $194 O $243 O $49
The Reynolds are thinking of refinancing their house. The plan to live in the house for the next five years. Refinancing will cost $3,000. They make their house payments at the end of each year. refinancing will reduce their payments by $800. The alternative use of the $3,000, instead of refinancing, is a savings account that pays 8 percent. The present value factor for five years, at 8 percent is 3.993. What is the net present value benefit of refinancing? O $1,000 O $194 O $243 O $49
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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Transcribed Image Text:The Reynolds are thinking of refinancing their house. The plan to live in the house for the next five years. Refinancing will cost $3,000. They make their house
payments at the end of each year. refinancing will reduce their payments by $800. The alternative use of the $3,000, instead of refinancing, is a savings account that
pays 8 percent. The present value factor for five years, at 8 percent is 3.993.
What is the net present value benefit of refinancing?
O $1,000
$194
O $243
O $49
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