55. A borrower has secured a 30-year, $150,000 loan at 7% with monthly payments of $1,000. Ten years later, the borrower has the opportunity to refinance with a 20-year mortgage at 5% with a monthly payment of $850. However, the upfront fees are $7,500. What is the return on investment if the borrower expects to remain in the home for the 20 years?

55. A borrower has secured a 30-year, $150,000 loan at 7% with monthly payments of $1,000. Ten years later, the borrower has the opportunity to refinance with a 20-year mortgage at 5% with a monthly payment of $850. However, the upfront fees are $7,500. What is the return on investment if the borrower expects to remain in the home for the 20 years?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

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