Question

In: Finance

Assume you have a 5% 20-year mortgage for $100,000 with now 10 years to maturity (annual...

Assume you have a 5% 20-year mortgage for $100,000
with now 10 years to maturity (annual payments with
exactly one year to the next payment).
• A new mortgage is available at 3.5% with a refi fee of
$3,000 including relevant prepayment penalties.

Should you refinance?

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -


Related Solutions

Assume you have a 5% 20-year mortgage for $100,000 with now 10 years to maturity (annual...
Assume you have a 5% 20-year mortgage for $100,000 with now 10 years to maturity (annual payments with exactly one year to the next payment). • A new mortgage is available at 3.5% with a refi fee of $3,000 including relevant prepayment penalties. Should you Refinance?
You have just negotiated a 5 year mortgage on $100,000 amortized over 25 years at a...
You have just negotiated a 5 year mortgage on $100,000 amortized over 25 years at a rate of 5%. After 5 years of payments, assume that the mortgage rate remains the same, but you change your monthly payment to $1500. If you change your payment, how many more periods will it take you to pay off the remaining loan balance?
You have a mortgage of $93,000 at 5% for 20 years. The property taxes are $3,700...
You have a mortgage of $93,000 at 5% for 20 years. The property taxes are $3,700 per year, and the hazard insurance premium is $686 per year. Find the monthly PITI payment.
You have a bond with a 5% coupon, 10 years to maturity and a Yield to...
You have a bond with a 5% coupon, 10 years to maturity and a Yield to Maturity of 4.75%. What is the dollar value of the bond?
You have borrowed $100,000 on a 40-year mortgage with monthly payments. The annual interest rate is...
You have borrowed $100,000 on a 40-year mortgage with monthly payments. The annual interest rate is 16 percent. How much will you pay over the course of the loan? With four years left on the loan, how much will you still owe? Excel
You have borrowed $100,000 on a 40-year mortgage with monthly payments. The annual interest rate is...
You have borrowed $100,000 on a 40-year mortgage with monthly payments. The annual interest rate is 16 percent. How much will you pay over the course of the loan? With four years left on the loan, how much will you still owe? excel
You have obtained a mortgage for $100,000 with annual interest rate of 6% that is to...
You have obtained a mortgage for $100,000 with annual interest rate of 6% that is to be paid over 30 years (interest is compounded monthly). Your monthly payment is $600. Complete the first few rows of the loan amortization table (show how you got the number): Months Loan balance Loan payment Interest Principal 1 2 3
Bond X is noncallable and has 20 years to maturity, a 10% annual coupon, and a...
Bond X is noncallable and has 20 years to maturity, a 10% annual coupon, and a $1,000 par value. Your required return on Bond X is 11%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 8.5%. How much should you be willing to pay for Bond X today? (Hint: You will need to...
Bond X is noncallable and has 20 years to maturity, a 10% annual coupon, and a...
Bond X is noncallable and has 20 years to maturity, a 10% annual coupon, and a $1,000 par value. Your required return on Bond X is 12%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 10%. How much should you be willing to pay for Bond X today? (Hint: You will need to...
Bond X is noncallable and has 20 years to maturity, a 10% annual coupon, and a...
Bond X is noncallable and has 20 years to maturity, a 10% annual coupon, and a $1,000 par value. Your required return on Bond X is 12%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 11%. How much should you be willing to pay for Bond X today? (Hint: You will need to...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT